PARIS — A French court ordered Switzerland's largest bank, UBS, to pay 4.5 billion euros ($5.1 billion) in fines and damages for helping wealthy French clients evade tax authorities, sending a stern warning to tax dodgers and the banks that aid them.
The Paris court convicted Zurich-based UBS AG on Wednesday of aggravated money laundering of the proceeds of tax fraud and illegal bank soliciting, issuing what French media called a record fine.
UBS, one of the world's largest wealth management banks, slammed the ruling and vowed to appeal. It denied criminal wrongdoing, saying in a statement that the conviction was based on "unfounded allegations of former employees."
UBS suggested the ruling was based on prejudices in France — which is known for its high taxes — against Swiss tax practices. It insisted that the bank was only offering "legitimate and standard services under Swiss law that are also common in other jurisdictions."
The Paris court disagreed, and ordered exceptional criminal fines of 3.7 billion euros ($4.2 billion) for UBS' Swiss head office and 15 million euros ($17 million) for its French subsidiary, and civil damages of 800 million euros ($907 million). Five former UBS executives were also given fines and suspended prison sentences.
Investigators say the Swiss bank sent employees to solicit business from wealthy executives or athletes during sports or music events in France, urging them to place their money in Switzerland.
The assets illegally concealed by French clients in Switzerland in 2004-2012 allegedly amounted to some 10 billion euros ($10.75 billion).
French government attorney Xavier Normand Bodard called Wednesday's verdict a "very important" ruling and suggested it could set a legal precedent for cases involving the laundering of proceeds of tax fraud.
"The court wanted to underscore ... the gravity of this case," he told reporters.
French national financial prosecutors and UBS representatives initially sought a plea bargain, but UBS rejected the out-of-court settlement — reportedly 1.1 billion euros — as too pricey. UBS said at the time it disagreed with "the allegations, assumptions and legal interpretations being made."
French financial prosecutors succeeded in striking a similar deal in 2017 with Swiss-based HSBC Private Bank, which agreed to pay 300 million euros ($352 million) to France to close a tax fraud case, a first in the country.
The UBS case was among the first tackled by the French national financial prosecutor's office, created in 2013. The ruling is viewed as a harbinger for similar French cases still underway, and may encourage other banks to reach a settlement instead of facing a trial.
The verdict comes as France is trying to attract financial business from London, with Britain facing a likely chaotic departure from the EU at the end of next month.
Advocacy groups that had fought for more bank transparency since the global financial crisis a decade ago cheered Wednesday's decision.
UBS agreed to pay $780 million in a 2009 deal with U.S. authorities over American tax cheats , part of a broader probe that targeted more than a dozen Swiss banks. The investigation marked a turning point for Switzerland's long-held bank secrecy laws, forcing the Swiss government to address concerns about foreign clients with hidden bank accounts.
Switzerland has worked in recent years to shed its image as a haven for tax evasion and money laundering, which had been carried out through the misuse of its banking secrecy policies.