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UBS agrees to name American clients
By James Vicini |
February 20, 2009, Friday
|
Print Edition
Print Edition
SWISS banking giant UBS AG has agreed to pay US$780 million and identify certain United States clients in a deal to resolve criminal fraud charges that it assisted rich Americans evade taxes.
The settlement, announced on Wednesday, further cracks Switzerland's trademark bank account secrecy and could expose some UBS customers to Internal Revenue Service scrutiny and law enforcement action.
"It will be interesting to see what this means for (UBS) longer term with high-net-worth people," Ralph Cole, portfolio manager at Ferguson Wellman Capital Management in Oregon, said. "What does it mean to have a Swiss bank account now if your name can be turned over to the Feds?"
Justice Department officials said Switzerland's largest bank had entered what is known as a deferred prosecution agreement on charges of conspiring to defraud the US by impeding the IRS, the US tax-collection agency.
Officials described the agreement as one of the biggest settlements ever. It eclipses a US$456-million pact in 2005 with accounting firm KPMG over the promotion of tax shelters.
Under the settlement, UBS admitted to helping US taxpayers hide accounts from the IRS. About 17,000 of 20,000 US cross-border clients concealed their identities and the existence of their accounts, with US$20 billion in assets, from the IRS, the Justice Department said.
"We accept full responsibility for these improper activities," Peter Kurer, chairman of UBS, said in a statement.
The Justice Department did not say how many names of UBS clients would be filed under US court seal. But Swiss newspaper, Le Temps, said in an article on its Website on Wednesday that the data would involve about 250 clients.
After 18 months, the US government will recommend dismissal of charges against UBS providing it honors the terms of the agreement.
The UBS charges and agreement represented the latest court developments in a long-running investigation.
In January, the former head of UBS AG's wealth management business, Raoul Weil, was formerly declared a fugitive after failing to surrender to US authorities on charges of conspiring to help Americans hide assets.
The settlement, announced on Wednesday, further cracks Switzerland's trademark bank account secrecy and could expose some UBS customers to Internal Revenue Service scrutiny and law enforcement action.
"It will be interesting to see what this means for (UBS) longer term with high-net-worth people," Ralph Cole, portfolio manager at Ferguson Wellman Capital Management in Oregon, said. "What does it mean to have a Swiss bank account now if your name can be turned over to the Feds?"
Justice Department officials said Switzerland's largest bank had entered what is known as a deferred prosecution agreement on charges of conspiring to defraud the US by impeding the IRS, the US tax-collection agency.
Officials described the agreement as one of the biggest settlements ever. It eclipses a US$456-million pact in 2005 with accounting firm KPMG over the promotion of tax shelters.
Under the settlement, UBS admitted to helping US taxpayers hide accounts from the IRS. About 17,000 of 20,000 US cross-border clients concealed their identities and the existence of their accounts, with US$20 billion in assets, from the IRS, the Justice Department said.
"We accept full responsibility for these improper activities," Peter Kurer, chairman of UBS, said in a statement.
The Justice Department did not say how many names of UBS clients would be filed under US court seal. But Swiss newspaper, Le Temps, said in an article on its Website on Wednesday that the data would involve about 250 clients.
After 18 months, the US government will recommend dismissal of charges against UBS providing it honors the terms of the agreement.
The UBS charges and agreement represented the latest court developments in a long-running investigation.
In January, the former head of UBS AG's wealth management business, Raoul Weil, was formerly declared a fugitive after failing to surrender to US authorities on charges of conspiring to help Americans hide assets.
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