UBS AG is being formally investigated for money laundering by French officials, who ordered the bank to post €1.1 billion ($1.49 billion) bail amidst a growing investigation into claims that it assisted high-profile clients evade French taxes. Just a month ago, UBS’ French subsidiary was fined a record-setting €10 million for being slow to correct poor oversight procedures that permitted employees to help clients dodge tax liabilities. In late June, French regulator Autorite de Controle Prudentiel (ACP) said the $13 million UBS France fine was the largest allowed under the country’s law. That fine came just weeks after the Swiss bank was placed under a separate formal investigation for their alleged tax evasion assistance.
ACP claims that it first warned UBS of its “grave concerns” in 2007, but the bank waited more than 18 months before it enacted additional controls and corrected the questionable procedures. UBS France’s controls failed to prevent its employees from sharing data that could identify customers who might set up offshore accounts to evade French taxes with the Swiss parent company. The regulator said UBS has fixed the issues and strengthened its procedures since 2009 and said its fine has no bearing in the ongoing criminal investigation.
The new investigation and the $1.49 billion bail amount represent the most recent developments in the ongoing investigation arising from allegations that UBS helped wealthy clients dodge French taxes by opening undeclared bank accounts in Switzerland. The Swiss bank was placed under investigation for “complicity in illegal sales practices” June 7. According to the BBC, investigators are looking into allegations that the bank broke French laws by soliciting potential clients in France. Those allegations came to light after a whistleblower sent a letter to French authorities saying the bank kept a special record between 2002 and 2007 listing undeclared bank accounts. UBS bankers also allegedly used sporting events and musical concerts to seek out affluent clients for tax evasion.
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