A French court ordered Switzerland’s largest bank, UBS, to pay 4.5 billion euros ($5.1 billion) in fines and damages for helping wealthy French clients evade tax authorities, wrapping up one of France’s biggest-ever tax evasion trials.
The Paris court convicted Zurich-based UBS AG on Wednesday of aggravated money laundering and illegal bank soliciting, issuing what French media called a record fine.
One of the world’s largest wealth management banks, UBS slammed the ruling and vowed to appeal.
It denied criminal wrongdoing, saying in a statement that the conviction was based on “unfounded allegations of former employees.” UBS suggested the ruling was based on French prejudice against Swiss tax practices and insisted that it was only offering “legitimate and standard services under Swiss law that are also common in other jurisdictions.”
The court ordered criminal fines of 3.7 billion euros ($4.2 billion) for UBS’ Swiss head office and 15 million euros ($17 million) for its French subsidiary, and civil damages of 800 million euros ($907 million). The executives were given suspended prison sentences.
The fines were in line with the prosecutor’s request.
Investigators say the Swiss bank sent employees to solicit wealthy executives or athletes during sport or music events in France, urging them to place their money in Switzerland. The assets illegally concealed by French clients in Switzerland in 2004-2012 allegedly amounted to some 10 billion euros ($10.75 billion).
French national financial prosecutors and UBS representatives initially sought a plea bargain, but UBS rejected the out-of-court settlement — reportedly 1.1 billion euros — as too pricey. UBS said at the time that it disagreed with “the allegations, assumptions and legal interpretations being made.”
Advocacy groups that had fought for more bank transparency since the global financial crisis a decade ago cheered Wednesday’s decision.
UBS agreed to pay $780 million in a 2009 deal with U.S. authorities over American tax cheats, part of a broader probe that targeted more than a dozen Swiss banks. The investigation marked a turning point for Switzerland’s long-held bank secrecy laws, forcing the Swiss government to address concerns about foreign clients with hidden accounts.
Switzerland has worked in recent years to shed its image as a haven for tax evasion and money laundering that has been carried out through the misuse of its banking secrecy policies.
The UBS case was among the first tackled by the French national financial prosecutor’s office, created in 2013. The ruling is viewed as a harbinger for similar French cases still under way, including one against London-based bank HSBC.