NEW YORK • Credit Suisse Group has frozen dozens of accounts as it tries to determine if United States clients are hiding money from the Internal Revenue Service (IRS), 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 telephone 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 was not authorised to speak publicly about the matter.
Any client activity involving 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 US stepped up a Justice Department investigation into why Credit Suisse neglected to tell them about US$200 million (S$285 million) in assets held by an American client who pleaded guilty on 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, said another person familiar with the matter.
"Credit Suisse has to prove it's doing all it can to identify Americans, in order to draw a line under its US tax dispute," said Mr Andreas Venditti, an analyst at Vontobel Holding in Zurich. "It's hard to assess the potential significance of these lingering issues as banks don't disclose details of unresolved legal matters."
Mr Dominique Gerster, a spokesman for the Zurich-based bank, and Ms Nicole Navas, a Justice Department spokesman, declined to comment on Wednesday about the freezing of accounts.
The US is investigating how effectively the firm rooted out hidden American accounts after a subsidiary pleaded guilty in May 2014, admitting it had helped thousands of Americans evade taxes.
Credit Suisse, which paid a US$2.6 billion fine with its guilty plea, is struggling to overcome its problems with the US tax authorities as it pins its future on managing money for the wealthy.
US prosecutors and regulators are probing whether the bank's failure to reveal accounts belonging to Dan Horsky, a retired business professor who pleaded guilty on Nov 4, was a lapse in internal controls or a crime involving bankers who acted with the approval of managers, the people said.
The government is also examining whether Credit Suisse helped clients with ties to Israel evade US taxes, they said.
Credit Suisse was one of 85 Swiss banks that signed agreements with US prosecutors admitting they helped Americans evade taxes. Eighty of those banks signed non-prosecution agreements through a disclosure programme that forced them to reveal their secrets.