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Record Fine Of €3.7 Billion For Tax Fraud Imposed On UBS By French Court

Record Fine Of €3.7 Billion For Tax Fraud Imposed On UBS By French Court
A record fine for France was announced by a Paris court against Swiss banking giant UBS. The fine amounted to 3.7 billion euros or $4.2 billion and is a landmark in tax fraud related fines in the country.
The conviction of the largest bank of Switzerland was based on the court finding true that allegations that the bank had been engaged in illegally helping out its wealthy French clients to conceal billions of euros so that they are able to launder the money and evade taxes for the same in France between 2004 and 2012.
Innocence was pleaded by UBS in the case. Experts believe that in case UBS chooses to appeal against the ruling, the case can drag on in courts for years. The Swiss bank has however set already set aside an amount of $2.46 billion for purposes of financing possible costs arising because of litigation and regulatory issues such as settlements.
Earlier, UBS agreed to settle similar charges placed against it in the United States for $780 million in 2009 and then agreed ot cough up a fine of 300 million euro in Germany in 2014.
The Swiss bank reported a net profit of $4.9 billion for 2018 just last month.
There has been increase scrutiny of European banks by regulators in relation to issues of better compliance to anti money laundering regulations after the global financial crisis and the latest ruling would also be scrutinised, said analysts. 
"Bankers in Europe are watching this case closely and will try to assess how exposed they are to similar risk," Thierry Bonneau, a banking law professor at Paris Pantheon-Assas University, told the media just of the ruling.
Compared to European standards, the fine amount by the Paris court is high even though much higher fines and settlements have been negotiated by banks in the US. That includes a fine of $8.9 billion imposed against BNP Paribas by a US court in 2015 over charges of the bank violating US economic sanctions on Sudan, Cuba and Iran.
Prior to the court ruling, the matter was investigated for seven years and there were more than one unsuccessful settlement attempts.
Swiss bankers were entertained by the UBS by sending them to golf tournaments, classical music concerts and hunting parties to seek out new wealthy customers and they were briefed about the illegal services that the bank would provide them, said French prosecutors. Authorities also charged the bank with colluding with the wealthy French customers to launder their money and to evade taxes.
UBS had a very systematic approach to help out those wealth\y clients interested in evading taxes and the funds laundering was undertaken at an “"industrial" scale, said French prosecutors.
The French law mandates that convicts of money laundering can be charged with fines amounting to half of the amount laundered. Billions of euros were stashed away from the French tax authorities by the bank’s customers, estimates the prosecution.
The amount of fine imposed on the bank was termed as being "irrational" and "extravagant" by lawyers for UBS and claimed that no material evidence against the bank were presented by the prosecutors.

Christopher J. Mitchell

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