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Angry UBS Appeals French Court's Verdict Over AML Case

Tom Burroughes, Group Editor , London, 20 February 2019


The Zurich-listed bank said the case was unsupported by "concrete" evidence, but was based on "unfounded allegations of former employees who were not even heard at the trial". It is appealing the verdict.

UBS, the world’s largest wealth management firm, is appealing a French court’s verdict that it illegally solicited and laundered tax fraud proceeds.

The court assessed that UBS AG and UBS (France) SA should face penalties of €3.7 billion ($4.2 billion) and €15 million respectively, and also assessed civil damages of €800 million. 

The case, which has gone on for several weeks, comes at a time when a number of AML and related cases have hit the European Union.

At SFr12.49 (about $12.5) today, shares in UBS were down by about 2.2 per cent from the open of the market. 

“UBS strongly disagrees with the verdict. The bank has consistently contested any criminal wrongdoing in this case throughout the investigation and during the trial. The conviction is not supported by any concrete evidence, but instead is based on the unfounded allegations of former employees who were not even heard at the trial,” the bank said in a statement today.

“No evidence was provided that any French client was solicited on French soil by a UBS AG client advisor to open an account in Switzerland. As no offence in France was established, the decision effectively applies French law in Switzerland. This undermines the sovereignty of Swiss law and poses significant questions of territoriality. The judgment does not depart from preconceived notions, incriminating the bank based on the fact that it offered certain legitimate and standard services under Swiss law that are also common in other jurisdictions,” UBS said.

The bank continued: “The verdict also lacks proof and a credible methodology for the calculation of the fine and damages. The charges of laundering the proceeds of tax fraud are without merit, as the predicate offence of an original tax fraud of French taxpayers was not proven. UBS respected and followed its obligations under Swiss and French law as well as the European Tax Savings directive, which came into force in 2004.”

The Zurich-listed bank said it will appeal the court’s verdict and evaluate whether the written decision requires any additional steps. 

UBS has crossed swords with foreign nations over tax issues before, most notably in 2009 when it settled criminal and civil charges with the US for helping wealthy Americans evade tax via offshore accounts. The bank has, along with many peers, sought to draw a line under such affairs and Swiss bank secrecy is, internationally at least, largely a dead letter. 

Under French law, an appeal suspends the judgment of the trial court and leads to a transfer of the case to the Court of Appeals which then retries the case in its entirety.

UBS has been dealing with the tax case for about eight years, and twice entered into talks to settle. The first attempt broke down in 2014 after UBS decided not to enter a guilty plea. Two years ago, UBS tried to settle, paying fines but not admitting guilt, but discussions collapsed over how much the bank should pay (Bloomberg, 19 February).

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