13/12/21

SWITZERLAND: French court set to rule on record UBS fine.

As published on reuters.com, Monday 13 December, 2021.

ZURICH, Dec 13 (Reuters) - French judges are set to rule on Monday on whether to overturn a record 4.5 billion euro ($5.1 billion) fine against Swiss bank UBS (UBSG.S) for allegedly helping wealthy clients stash undeclared assets offshore.

The case is being watched by banks to see if it signals a toughening European stance. Fines in Europe for tax-related and other offences have in the past been smaller than in the United States, but the size of the UBS penalty has proved an exception.

The Paris appeals court is set to rule on whether to confirm or adjust the penalty against Switzerland's largest lender, which was imposed after an initial trial in 2019.

UBS appealed against the verdict that found it guilty of illegally soliciting clients at sporting events and parties in France, and laundering the proceeds of tax evasion.

Lawyers for UBS argued in the appeals trial that, despite whistleblowers coming forward, investigators had never found clear evidence of systematic attempts to canvass French customers by UBS commercial specialists.

The bank wants the allegations thrown out. It has also said the fine imposed was disproportionate.

Prosecutors in the appeals trial said they would seek a fine of at least 2 billion euros, while the French state is looking for 1 billion euros in damages - bringing total penalties to closer to 3 billion euros.

The bank has set aside 450 million euros to cover for any penalty in the case.

The appeals court ruling was delayed from September due to the ill health of one of the magistrates. Any verdict in the case can be further appealed to France's Supreme Court.

The French case involved an unusually high fine for Europe. By comparison, UBS settled a Belgian tax evasion case in November involving a penalty of 49 million euros.

The 2019 UBS case in France also resulted in Swiss judges setting a precedent for foreign governments seeking information from Swiss banks, although they said such information was limited to pursuing tax evaders and not to be used against the bank itself.