Wednesday, August 19, 2009

White Collar: UBS Agrees to Provide DOJ with Account Holder Names

The world's largest private bank, UBS of Switzerland, has agreed to a settlement in a Justice Department civil suit that sought the names and account information for American account holders seeking tax shelters with the Swiss giant. DOJ and the Internal Revenue Service have agreed with UBS for the bank to disclose the names and account information of 4450 wealthy American account holders whom the government suspects of having committed income tax fraud.

In the original suit the US had sought the names and account information of 52,000 UBS American account holders. UBS had defended against that action by claiming that such disclosure would violate Swiss banking secrecy laws. After months of negotiation that involved the US government, UBS, and Swiss authorities, the parties arrived at the settlement, requiring UBS to examine the accounts within 370 days.

UBS intends to notify the account holders whose names it will disclose to US authorities. This will allow the individuals to self report to the IRS. The government has a voluntary disclosure program in effect until September 23, 2009. Those who self report before that date will most likely avoid criminal prosecution. Additionally, they will probably avoid larger penalties and fines that would result if caught without self reporting. Numerous persons have already self reported and the addition of the 4450 new names will bring the total number of UBS related account holders disclosed to the IRS to more than 5000. US authorities claim that at the height, UBS held more than $18 billion in accounts for wealthy Americans.

The settlement appears to be a major step forward by the US in its efforts to combat tax evasion. The agreement with the Swiss banking authorities is a significant achievement in the US's efforts to pierce Swiss banking secrecy laws. Importantly, Swiss government officials will also intervene with other Swiss banks to disclose to American authorities the names of more Americans hiding money in the other banks.

In February UBS settled criminal charges in the US of conspiracy to help American clients evade taxes on approximately $20 billion in assets held in Switzerland. The criminal settlement reacquired UBS to pay $780 million and disclose the names of 250 American account holders. Currently, approximately 150 Americans are under investigation for tax evasion related to the scheme. After UBS provides the information on the 4450 clients, the number under investigation is certain to rise.

For more on the settlement, please see the article in the New York Times, "Under Agreement, UBS to Give Up Over 4,000 Names," August 19, 2009,

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