ZURICH?U.S. authorities are investigating Credit Suisse Group AG's operations in Israel, people familiar with the matter said, once again placing the Swiss bank under Justice Department scrutiny related to its handling of American clients.
The Justice Department recently notified Zurich-based Credit Suisse of the investigation, which is focused on determining whether employees in Israel helped dual Israeli and U.S. citizens conceal their U.S. status to evade American taxes, the people said.
Information about foreign banks' clients who are identified as American must now be automatically transmitted to U.S. tax authorities, under the recently-implemented U.S. Foreign Account Tax Compliance Act.
Banks including Credit Suisse have sought to bulk up on related compliance efforts, to ensure clients with U.S. ties?even those with citizenship in additional countries?are flagged.
The new probe comes roughly two years after Credit Suisse pleaded guilty in the U.S. to conspiring to help American clients evade taxes. Credit Suisse agreed to pay $2.6 billion to various regulators as part of its settlement and entered into a plea agreement stipulating it would close accounts of U.S. clients who fail to report their assets for tax purposes.
Credit Suisse also agreed to supervision by a monitor, selected by the New York Department of Financial Services, who is tasked with investigating the bank's dealings with U.S. customers. The monitor, who is still scrutinizing Credit Suisse, has been made aware of the new investigation, a person familiar with the matter said.
The investigation is another potential headache for Credit Suisse as it struggles to revamp under Chief Executive Tidjane Thiam, who took over roughly a year ago. Mr. Thiam has sought to curb riskier, more-costly investment banking businesses and to bolster wealth-management operations with a sharper focus on compliance.
"We aim to operate going forward at the highest levels of compliance," Mr. Thiam said at a recent news conference. "From the past you can find all kinds of legacy issues."
After Credit Suisse was notified of the Justice Department's new probe focused on the Israel office, the bank began its own internal investigation, people familiar with the matter said.
Without mentioning Israel, a Credit Suisse spokeswoman said the bank is conducting an internal employee-conduct investigation "related to tax matters," and that five employees have been placed on leave. She declined further comment.
Credit Suisse had earlier confirmed its internal probe to Swiss newspaper Schweiz am Sonntag.
A Justice Department spokeswoman declined to comment.
The Justice Department's examination is focused on the period leading up to Credit Suisse's 2014 guilty plea and the period following it, a person familiar with the matter said. The May, 2014 plea brought to a close a Justice Department investigation that had lasted several years.
The U.S.-based monitor probing Credit Suisse on behalf of the New York Department of Financial Services, Neil Barofsky, started his oversight of the bank in October, 2014, and was meant to remain in place?at the bank's expense?for no more than two years. However, the bank's struggles in providing Mr. Barofsky with all of the information he has required about its business with U.S. clients may extend his tenure.
Costs stemming from the bank's tax-related U.S. settlements, including those resulting from the monitor, have totaled 285 million Swiss francs ($297 million) since the second quarter of last year, according to public filings.
The U.S. has been cracking down on Swiss banks for harboring untaxed American assets for several years. The Justice Department recently completed a self-reporting program for dozens of Swiss banks that disclosed undeclared U.S. money on their books and paid related fines in exchange for agreements that the banks wouldn't be criminally prosecuted.
Other Swiss banks that, like Credit Suisse, came under Justice Department investigation for aiding U.S. tax evasion, were unable to join the program because they were already under criminal probes. A handful of Swiss banks remains under investigation.
Laura Saunders contributed to this article.
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