The involvement of UBS in schemes to help US investors allegedly
circumvent taxes is providing regulators with ammunition to attack
Swiss banking secrecy and effectively get disclosure of the
identities of thousands of customers.
In the latest twist to the story, a grand jury in Florida has
charged Raoul Weil, head of the UBS Wealth Management Division,
with helping 17,000 Americans avoid tax by safeguarding their money
in secret Swiss bank accounts.
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The US Department of Justice has been pursuing UBS for many
months over its offshore banking operations for US nationals.
Between 2002 and 2007, some 20,000 American clients had private
accounts at UBS with a hefty $20 billion in total assets.
In response to the action against Weil, UBS issued a short
statement saying the executive was relinquishing his duties until
the matter was resolved.
It added: “UBS is fully committed to continuing its efforts to
co-operate with the investigation of its US cross-border business
in a responsible manner with all relevant authorities towards a
satisfactory resolution of this matter.”
An attorney for Weil, who is based in Zurich, said he was
innocent and called the charges against him “totally
unjustified”.
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By GlobalDataThe US authorities want the names of UBS’s current 17,000
wealthy American clients. If it concedes disclosure, the Swiss bank
will set a highly significant precedent not only for its rivals in
Switzerland but for banks in offshore centres around the world
which operate in the US.
Setting a precedent
If the US can get a few hundred million dollars from UBS they
“have a template with which they can go after any other foreign
bank”, said Vontobel analyst Panagiotis Spiliopoulos.
Switzerland has so far refused to hand over details of Swiss
bank accounts held in the name of UBS’s US clients but is seeing
whether it can co-operate under the country’s laws.
UBS decided earlier this year to stop offering offshore Swiss
bank accounts to US citizens. But in moving to close the accounts,
the bank may be placing clients at greater risk of being exposed to
the US tax authorities.
UBS clients are being told their Swiss accounts will soon be
liquidated. Those who have concealed funds from the Internal
Revenue Service have two basic choices – take new and potentially
difficult steps to hide the money, heightening their risk of being
caught and punished severely, or comae clean, lawyers say.
Some lawyers believe that the decision to close the accounts,
which will force many clients to come into the open, effectively
undermines the Swiss code of banking secrecy.
