a first for Swiss banking where secrecy is at a premium, UBS, the largest bank in Switzerland, agreed on Wednesday to divulge the names of well-heeled Americans whom the authorities suspect of using offshore accounts at the bank to evade taxes. The bank admitted conspiring to defraud the Internal Revenue Service and agreed to pay $780 million to settle a sweeping federal investigation into its activities.
Federal prosecutors have been examining about 19,000 accounts at the bank, but UBS ultimately may disclose the identities of only a few hundred customers. But to some, turning over any names at all heralds the end of the secret Swiss bank account, whose traditions date to the Middle Ages.
"The Swiss are saying that this is the end of Swiss banking as they knew it," said Jack Blum, an offshore tax specialist. "Nobody will trust the security of the Swiss bank account."
Under the terms of a so-called deferred prosecution agreement, the bank and its executives could be indicted if UBS didn't identify the customers. UBS also said it is closing the offshore accounts of its American clients, which earned it around $200 million annually. In all, prosecutors suspect that from late 2002 to 2007, UBS helped American clients illegally hide $20 billion, letting them evade $300 million a year in taxes.
In a striking admission, UBS said that from 2000 through 2007, some of its private bankers and managers participated in a scheme to defraud the US and the IRS by helping American clients set up and conceal offshore accounts. The scheme involved falsifying or not properly obtaining or filing certain tax forms required of both the bank and its clients. UBS's offshore private banking business once employed some 60 private bankers in Lugano, Zurich and Geneva.
UBS urged some American clients to destroy records and to stash watches, jewellery and artwork that they had bought with money hidden offshore in safe deposit boxes in Switzerland. The bank also encouraged them to use Swiss credit cards so the IRS could not track purchases. In a statement on Wednesday, Peter Kurer, the chairman of UBS, said that UBS sincerely regrets the compliance failures in its cross-border US operations.
"We accept full responsibility for these improper activities." Marcel Rohner, the group chief executive of UBS, said in a statement that it is apparent that "as an organization we made mistakes and that our control systems were inadequate".
The settlement caps a painful run for UBS, which suffered more than $50 billion in losses in the collapse of the American mortgage market and received a $60 billion bailout from the Swiss government last October. Of the $780 million that UBS will pay, $380 million represents disgorgement of profits from its cross-border business.
The remainder represents US taxes that UBS failed to withhold on the accounts.
As part of the deal, UBS also entered into a consent order with the Securities and Exchange Commission in which it agreed to charges of having acted as an unregistered broker-dealer and investment adviser for Americans.
Source:http://timesofindia.indiatimes.com/Business/Swiss-bank-to-reveal-secret-accounts/articleshow/4157845.cms
Federal prosecutors have been examining about 19,000 accounts at the bank, but UBS ultimately may disclose the identities of only a few hundred customers. But to some, turning over any names at all heralds the end of the secret Swiss bank account, whose traditions date to the Middle Ages.
"The Swiss are saying that this is the end of Swiss banking as they knew it," said Jack Blum, an offshore tax specialist. "Nobody will trust the security of the Swiss bank account."
Under the terms of a so-called deferred prosecution agreement, the bank and its executives could be indicted if UBS didn't identify the customers. UBS also said it is closing the offshore accounts of its American clients, which earned it around $200 million annually. In all, prosecutors suspect that from late 2002 to 2007, UBS helped American clients illegally hide $20 billion, letting them evade $300 million a year in taxes.
In a striking admission, UBS said that from 2000 through 2007, some of its private bankers and managers participated in a scheme to defraud the US and the IRS by helping American clients set up and conceal offshore accounts. The scheme involved falsifying or not properly obtaining or filing certain tax forms required of both the bank and its clients. UBS's offshore private banking business once employed some 60 private bankers in Lugano, Zurich and Geneva.
UBS urged some American clients to destroy records and to stash watches, jewellery and artwork that they had bought with money hidden offshore in safe deposit boxes in Switzerland. The bank also encouraged them to use Swiss credit cards so the IRS could not track purchases. In a statement on Wednesday, Peter Kurer, the chairman of UBS, said that UBS sincerely regrets the compliance failures in its cross-border US operations.
"We accept full responsibility for these improper activities." Marcel Rohner, the group chief executive of UBS, said in a statement that it is apparent that "as an organization we made mistakes and that our control systems were inadequate".
The settlement caps a painful run for UBS, which suffered more than $50 billion in losses in the collapse of the American mortgage market and received a $60 billion bailout from the Swiss government last October. Of the $780 million that UBS will pay, $380 million represents disgorgement of profits from its cross-border business.
The remainder represents US taxes that UBS failed to withhold on the accounts.
As part of the deal, UBS also entered into a consent order with the Securities and Exchange Commission in which it agreed to charges of having acted as an unregistered broker-dealer and investment adviser for Americans.
Source:http://timesofindia.indiatimes.com/Business/Swiss-bank-to-reveal-secret-accounts/articleshow/4157845.cms
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