A Paris court on Wednesday fined Swiss banking giant UBS 3.7 billion euros ($4.2 billion) in a landmark tax fraud case, setting a record for France.

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Switzerland’s largest bank was convicted of illegally helping its wealthy clients in France to hide billions of euros from French tax authorities between 2004 and 2012 and launder the proceeds.

UBS denied any wrongdoing and the case could drag on for years if appealed by the Swiss bank, which has set aside $2.46 billion to cover potential losses from litigation and regulatory requirements.

The French trial follows a similar case in the United States, where UBS accepted a $780 million settlement in 2009 and in Germany, where it agreed to a 300 million euro fine in 2014.

UBS last month reported a 2018 net profit of $4.9 billion.

European banks have come under pressure from regulators to tighten compliance with anti money laundering rules since the financial crisis and will scrutinise the ruling, analysts say.

"Bankers in Europe are watching this case closely and will try to assess how exposed they are to similar risk," Thierry Bonneau, a banking law professor at Paris Pantheon-Assas University, said ahead of the ruling.

The penalty French prosecutors are seeking is high by European standards, although in the United States judges have levied higher fines including the $8.9 billion a US court in 2015 ordered BNP Paribas to pay for violating US economic sanctions against Sudan, Cuba and Iran.

Golf and hunting

The French court ruling marks the culmination of a seven-year investigation and aborted settlement negotiations.

French prosecutors say UBS sent Swiss bankers to golf tournaments, classical music concerts and hunting parties to solicit new clients illegally, while the bank is also alleged to have helped its clients launder the money involved.

The prosecutors said UBS was "systematic" in its support to tax-evading customers and that the laundering of proceeds from the tax fraud was done on an "industrial" scale.

Under French law, those convicted of money laundering can be ordered to pay a fine totalling half the amount laundered. The prosecution estimates UBS's customers hid billions of euros from the French tax authorities.

Prosecutors told the court that UBS's bankers would hand over business cards without any logo and used computers which carried software allowing data to be quickly erased.

Lawyers for UBS hadcalled the magnitude of the possible penalty "irrational" and "extravagant" and said prosecutors failed to bring material evidence against the bank.

UBS, whose lawyers said the case had become politicised, turned down a settlement offer of 1.1 billion euros, an amount the bank was later requested to pay as a court bond.

(FRANCE 24 with REUTERS, AFP)

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