UBS AG (UBS), the Swiss banking behemoth is trapped in money laundering and tax evasion issues. Recently, a Paris appeals court mandated the bank to pay 1.1 billion euro ($1.41 billion) bond as claimed by the French investigators.

Notably, this verdict upheld an earlier ruling which was part of a probe to determine the bank’s role in helping wealthy French customers to evade taxes.

A formal probe against the Zurich-based bank regarding money laundering was initiated by the French authorities earlier this year. The authorities ordered the bank to pay the bail by Sep 30, 2014, so as to cover the potential charges. However, UBS AG made an appeal against the verdict citing the bail amount as ‘unprecedented and unwarranted.’

The latest court verdict, supporting the earlier order, comes as a big setback for UBS AG. The world’s largest wealth manager was confident that it would be able to settle the matter for a considerably lesser amount, but its hopes were dashed. Nevertheless, the bank is mulling over appealing to the Supreme Court as it finds the verdict largely influenced by politics.

France to Crack Down on Tax Evasion

UBS AG has been under probe by the French regulators over issues of money laundering and tax evasion for quite some time. This is not the first action that the regulators have taken in this regard. In fact, one of the ministers in President François Hollande’s office admitted to holding a dubious foreign account last year. The president then took stern actions to prevent tax evasion.

Moreover, with his popularity waning, Hollande is desperately trying to fulfill his pledge of rekindling economic growth and reducing the budget deficit.

We believe that the current spate of probes on banks will act as a deterrent to offshore tax evasions and will help in lowering the huge losses incurred due to the same.