CREDIT SUISSE SAID TO FREEZE ACCOUNTS IN SEARCH FOR U.S. ASSETS

(Bloomberg) -- Credit Suisse Group AG has frozen dozens of accounts as it tries to determine if U.S. clients are hiding money from the Internal Revenue Service after the firm pledged to come clean about secret assets, according to a person familiar with the matter.

The bank is looking at indicators such as phone numbers or powers of attorney to determine whether Americans are the true owners of accounts not disclosed to the IRS, according to the person, who wasn’t authorized to speak publicly about the matter. Any client activity on these accounts now requires approval by a group within Credit Suisse, the person said.



The unusual move to freeze accounts came in the past week as the U.S. stepped up a Justice Department investigation into why Credit Suisse neglected to tell them about $200 million in assets held by an American client who pleaded guilty Nov. 4 to conspiring to defraud the IRS, according to several people familiar with the matter.

The bank wants to show that any hidden accounts were a lapse in controls and not a criminal act, another person familiar with the matter said.

Dominique Gerster, a spokesman for the Zurich-based bank, and Nicole Navas, a Justice Department spokeswoman, declined to comment on Wednesday about the freezing of accounts.
The U.S. is investigating how effectively the firm rooted out hidden American accounts after a subsidiary pleaded guilty in May 2014, admitting it helped thousands of Americans evade taxes. A monitor appointed by New York’s banking regulator continues to review Credit Suisse’s operations after his initial two-year appointment was extended.

Credit Suisse, which paid a $2.6 billion fine with its guilty plea, is struggling to overcome its problems with U.S. tax authorities as it pins its future on managing money for the wealthy. The bank is betting it can attract rich individuals and families by offering them loans in the hundreds of millions of dollars while it pivots from investment banking to wealth management.

U.S. prosecutors and regulators are probing whether the bank’s failure to reveal accounts belonging to Dan Horsky, a retired business professor who pleaded guilty Nov. 4, was a lapse in internal controls or a crime involving bankers who acted with approval of managers, the people said. The government is also examining whether Credit Suisse helped clients with ties to Israel evade U.S. taxes, they said.

Credit Suisse is now questioning relationship managers about specific accounts with links to the U.S., according to one of the people familiar with the matter. The bank will likely argue to U.S. authorities that managers didn’t know about lingering undeclared accounts that weren’t detected in earlier internal probes, the person said.