Swiss private bank Julius Baer is cooperating in a French investigation into suspected money laundering and tax fraud by a former client involved in the European carbon allowances market, a spokeswoman said, following French media reports.
News agency AFP said last week the bank is suspected of receiving funds in a Swiss account that were linked to value-added tax (VAT) fraud in the EU Emissions Trading System, and of failing to perform adequate client checks.
Julius Baer had referred to the investigation in its half-year report on July 21 but had not said it concerned the carbon market.
- “In the context of an investigation against a former client regarding alleged participation in a tax fraud in France, a formal procedure into suspected lack of due diligence in financial transactions has been initiated against (the bank) in June 2014,” the bank said.
An official at the Paris financial court said it was not immediately able to comment on the investigation.
Tax fraud rocked the EU Emissions Trading System in 2009 and 2010, with European police agency Europol estimating that the crime cost EU governments over 5 billion euros in lost revenues.
The fraud, often called missing trader or carousel fraud, involves a buyer importing goods free of VAT into one EU member state from another.
The buyer then sells the goods onwards with VAT included in the price, often through a series of firms in an untraceable chain, before pocketing the tax and disappearing.
Julius Baer is not the first financial institution to be drawn into such tax investigations involving the carbon market.
In December 2012 the German authorities raided Deutsche Bank’s offices in Frankfurt and put 25 of its staff under investigation, including co-Chief Executive Juergen Fitschen and finance chief Stefan Krause, on suspicion of tax evasion, money laundering and obstruction of justice.
But prosecutors are not expected to lay any such charges against Deutsche Bank, a source close the matter said last month, adding that the bank would likely be reprimanded only for negligence in failing to properly screen its clients.
(Reporting by Joshua Franklin in Zurich and Michel Rose in Paris; Writing by Michael Szabo; Editing by Greg Mahlich)
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