Credit Suisse Said to Face Money-Laundering Probe in Italyby and
Bank also said to be probed for tax evasion in Milan case
Bank says business has clear rules, focused on declared assets
Milan prosecutors are investigating Credit Suisse Group AG on suspicion of money laundering and tax evasion over billions of euros of insurance policies sold Italian clients and used to shield funds from authorities, people with knowledge of the case said.
Starting in 2005, Credit Suisse allegedly helped about 4,000 clients protect as much as 8 billion euros ($8.9 billion) of funds that were earned illicitly, mainly as income that was undeclared to Italian tax authorities, said the people, who asked not to be identified because the probe isn’t public.
Clients were sold insurance policies issued by Lichtenstein and Bermuda subsidiaries of the bank, the people said. The scheme enabled them to skirt a Swiss withholding tax on deposits in foreign-held accounts while retaining access to their cash, which they could still manage from Swiss accounts, said the people.
If the allegations are proved, Credit Suisse could face penalties from fines to suspension or closure of businesses in Italy as well as damage to its reputation, said Fabio Belloni, a Milan-based criminal lawyer who isn’t involved in the case.
"Credit Suisse’s business with private clients is systematically focused on declared assets and we have clear internal rules and processes in place to ensure that we conduct our business in accordance with the applicable laws in Italy," the bank said by e-mail. "We can’t comment on ongoing investigations."
Swiss banks have come under increased scrutiny in recent years amid an international crackdown on tax evasion. Credit Suisse was fined $2.6 billion in the U.S. in 2014 for helping Americans evade taxes. The bank paid a 150 million-euro fine in Germany in 2011 to end court proceedings over allegations it helped clients evade taxes.
The Italian investigation started about two years ago when tax auditors flagged irregularities to prosecutors, the people said. In late 2014, searches at the bank’s key offices in Italy turned up a list of 13,000 private and corporate clients with 14 billion euros of funds in Swiss accounts, including the 8 billion euros allegedly transformed into insurance policies, said the people. The amounts involved are still under review, said the people.
They also found a Credit Suisse manual instructing employees how to handle relationships with clients so as not to arouse the attention of authorities about their contacts, they said.
Italy’s tax agency and financial police are conducting a separate review into whether the clients, who used the procedures recommended by the bank, evaded taxes, two of the people said.
Italy’s financial daily Il Sole 24 Ore a year ago reported that Credit Suisse was under scrutiny for its role in client tax fraud.