UBS AG (NYSE:UBS) (VTX:UBSN)’s division in France has been fined $13.1 million by the top regulator in the country. The bank was also criticized for a lack of controls the regulator said might have made it possible for some of its clients to dodge taxes.
French Regulator’s Statement On UBS
Bloomberg’s Elena Logutenkova and Fabio Benedetti-Valentini report that a statement provided from French regulator ACP said that UBS AG (NYSE:UBS) (VTX:UBSN) knew that its sales force was suspected of covering up tax fraud and taking part in illicit marketing. However, the regulator said that the bank took over 18 months to set up the controls necessary to handle the issues. According to ACP, UBS did not take the appropriate steps to limit the access its sales force had to certain key computer files.
The $13.1 million fine is over twice the fine levied against Societe Generale SA in 2008 when similar problems were uncovered. Those issues were connected to trading losses that added up to billions of euros. The fine levied against UBS is also the largest one possible under the law in France and the highest ever given in a case like it, an ACP spokesperson told The New York Times.
UBS says it disagrees with the regulator’s decision and that it will fully review it before deciding whether it should file an appeal.
Judicial Probe Of UBS Continues
Although a fine has been levied against UBS AG (NYSE:UBS) (VTX:UBSN), Reuters’ Lionel Laurent reports that a judicial probe into the bank’s practices is still underway. Both UBS and its French unit are under investigation by prosecutors in France. The investigation deals with the question of whether staff members in the bank’s French sales unit were offering their clients bank accounts in other countries so that they could dodge taxes in France.
Switzerland has been under pressure from other countries to share its banking information and put an end to processors which other countries believe may be contributing to tax dodging. However, this month the Swiss parliament rejected a bill that would enable it to share its banking information, possibly opening its banks up to indictments from the U.S. and other countries.