A federal judge in New York has ruled that the US Internal Revenue Services (IRS) can demand secret account data from UBS about indicted Swiss private bank Wegelin’s US clients.
In Manhattan federal court, U.S. District Judge William H. Pauley signed a John Doe Summons requiring UBS to give information on Wegelin correspondent accounts to the IRS.
The records should allow US authorities to determine who held assets at Wegelin and other Swiss institutions using UBS accounts, in a transparency battle led by the IRS and US courts.
Switzerland’s oldest bank Wegelin was forced to close on 3 January after it admitted charges of conspiracy in helping more than 100 US taxpayers avoid paying up taxes to the IRS on up to $1.2bn held in offshore accounts, for almost a decade.
UBS: "order does not refer to UBS"
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
UBS said in a statement the order "does not refer to UBS client data, and no data from Switzerland is concerned."
"With the order, the US court demanded information about transactions, which Wegelin executed via its publically known correspondent banking relationship with UBS in the US. A correspondent bank account is a standard service for third-party banks that do not have local representation," the bank said in the statement.
UBS added it will comply with local legal obligations.
Wegelin’s correspondent accounts
Assets held in UBS accounts in the name of Wegelin & Co were first flagged up in 2 February 2012 by US Attorney Preet Bahara who alleged Wegelin held $16.2m in a UBS account.
Then in a court petition dated 25 January 2013, Assistant U.S. Attorney Natalie N. Kuehler said Wegelin held a correspondent account through a UBS office in Stamford, Connecticut.
In an order dated the same day, Kuehler said: "Wegelin used the UBS correspondent account to facilitate the concealment of its U.S. taxpayer-clients’ undeclared Swiss accounts by, among other things, routing money to those clients through the UBS correspondent account to fictitious corporate entities or third parties and in instalments of $8,500 to help avoid detection by the IRS."
The order also claimed the information obtained from the examination of the documents related to the Wegelin accounts and "the identities of the persons with respect to whose liability the summons is issued" are not readily available from other sources.