ZURICH / FRANKFURT- The German tax authorities initiated raids between clients of Credit Suisse and French banks. The searched the homes of UBS employees as part of a campaign against foreigners suspected of evading taxes through the two major Swiss banks.
The strict rules on bank secrecy, which have helped build an offshore financial sector worth $2 billion, have angered other cash-strapped governments that try to curb the occurrences of wealthier citizens evading tax payments.
About 5,000 German customers of Credit Suisse are being investigated on suspicion of tax evasion and some have had their homes searched, a bank source said on Wednesday. In addition to this, European tax authorities have also expanded their inquiry to clients of other banks.
Meanwhile, UBS offices in Lyon, Bordeaux, and Strasbourg are under suspicion of money laundering and support for tax evasion, according to a source of that entity. This information was gathered last Tuesday and as of writing, authorities have included these offices in their list of suspects.
Home addresses of senior employees of UBS in Strasbourg were also being reviewed, the source added. UBS spokesperson said that they were cooperating with authorities to ensure the smooth flow of their investigations.
It was not immediately clear whether the records in Germany and France were coordinated or not. Credit Suisse said that are aware that the German tax authorities are investigating their clients but gave no further comments. The UBS declined to give any comment because the investigation is still on-going.
The source at the bank said authorities in the German city of Bochum and Düsseldorf were also investigating whether clients were able to life insurance plans in Bermuda to avoid taxes. Authorities in both cities declined to comment.
The German investigation is under an agreement with Switzerland to levy tax on German assets hidden in Swiss bank accounts. It will come into force next year, pending parliamentary approval.
Last September, Credit Suisse signed an agreement with the German tax authorities, agreeing to pay € 150 million to end an investigation that involves an allegation that the bank and its employees helped the Germans evade taxes.
In 2009, UBS was forced to pay a fine and disclose the names of 4,500 clients to U.S. authorities to end a damaging tax evasion investigation. The U.S. continues its tax evasion investigation against Helvetians banks, including Credit Suisse and Julius Baer.
Switzerland is trying to revoke this research on payment of fines and disclosing the names of thousands of U.S. customers.