US authorities have charged Switzerland’s
oldest private bank Wegelin with helping US taxpayers hide more
than $1.2bn from the Internal Revenue Service (IRS). They have also
seized $16m in assets held in a US-based Wegelin account.

The indictment by the US Department of Justice
(DOJ) is the first time an overseas bank has been charged with
facilitating US tax fraud.

The civil case follows on from the criminal
charges brought in January against three of Wegelin’s Zurich-based
client advisers: Michael Berlinka, Urs Frei and Roger


Accused of courting ex-UBS

The US Attorney’s Office indictment accused
the trio of trying to capture business lost by UBS and another
unnamed Swiss bank, likely to be Credit Suisse.

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By GlobalData

The indictment alleged that Berlinka, Frei and
Keller opened and serviced dozens of undeclared accounts for US
taxpayers in 2008 and 2009 after it was reported that the IRS was
investigating UBS for helping US taxpayers evade taxes and hide
assets in Swiss accounts.

Berlinka, Frei and Keller are alleged to have
told clients that their undeclared accounts would be safe at their
bank because it had a long tradition of secrecy and had no offices
outside Switzerland.


Scheme used personal email

According to the DOJ, Wegelin allegedly
created a scheme that allowed its US taxpayer-clients to obscure
the source of their undeclared accounts in Switzerland and access
them in US through a correspondent bank account that it held at UBS
in Connecticut.


The DOJ also alleged that Wegelin:


  • opened and serviced undeclared accounts for US taxpayer-clients
    in the names of sham corporations and foundations formed under the
    laws of Liechtenstein, Panama, Hong Kong;


  • permitted certain US taxpayer-clients to open and maintain
    undeclared accounts at Wegelin using code names and numbers to
    minimise references to the actual names on Swiss bank


  • ensured account statements and other mail for US
    taxpayer-clients were not mailed to them in the US;


  • communicated with some US taxpayer-clients using their personal
    email accounts to reduce the risk of detection by law


Regulatory pressure forces

Pressure from US authorities in connection
with the alleged tax fraud forced Wegelin to sell its non-US
private banking business to Raifeissen Group last week.

Wegelin & Co will now be run as an
independent private bank, Notestein Private Bank, within the
Raifeissen group.

Wegelin had not responded to PBI’s
request for comment at the time this story was posted.