Swiss Bank UBS Agrees to Pay $780
Million Fine and
to Disclose Names of Secret Account Holders
Courtesy of http://tax.cchgroup.com,
February 19, 2009. The U.S. Justice Department (DOJ) announced on February
18 that UBS AG, the largest bank in Switzerland, will pay $780 million in
fines, penalties and restitution to the U.S. government, and has agreed to
disclose the names of thousands of secret accountholders to the IRS. The
DOJ entered into a deferred prosecution agreement with the bank and filed
a criminal information in federal district court that charged UBS with
conspiring to defraud the U.S. by helping its accountholders evade U.S.
taxes. UBS's offshore banking services generated income of $200 million a
year from 2002 through 2007.
The information alleges that UBS provided
private banking services to approximately 20,000 U.S. clients with
accounts worth approximately $20 billion. Seventeen thousand of the
clients concealed their identities and the existence of their UBS accounts
from the IRS, and many of the clients failed to pay U.S. taxes on their
account earnings. UBS assisted this concealment by helping clients create
nominee offshore structures and transferring assets to UBS accounts in the
name of the nominees. UBS also assisted clients in filing IRS forms that
claimed that the offshore nominees, not the U.S. clients, owned the
offshore accounts. In addition, UBS failed to report and withhold on the
accounts' earnings.
UBS will immediately provide the IRS with
identities and account information for U.S. customers of its cross-border
banking business. The bank has also agreed to cease providing banking
services to U.S. clients with undeclared accounts.
"The veil of secrecy has been pulled aside
and we will continue to aggressively pursue those who shirk their federal
tax obligations or assist others in doing so," Acting Assistant Attorney
General (Tax Division) John DiCicco said in a statement. "UBS executives
knew that UBS's cross-border business violated the law," U.S. Attorney R.
Alexander Acosta declared. "They refused to stop this activity, however,
and in fact instructed their bankers to grow the business. This was...a
knowing crime motivated by greed and disrespect of the law," Acosta said.
IRS Commissioner Douglas H. Shulman noted
that the IRS received court permission to issue a summons to UBS to
identify taxpayers who were hiding offshore income. "Today's agreement
states that the U.S. government will continue to seek enforcement of the
summons," Shulman said. "People who have hidden unreported income offshore
need to get right with their government. They should come forward and take
advantage of our voluntary disclosure process."
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