Switzerland Bank Investigations

BERN, Switzerland – American clients who each hid more than 1 million Swiss francs in undeclared bank accounts with UBS AG between 2001 and 2008 could have their details turned over to the U.S. government, Swiss officials said Tuesday.




The Swiss Justice Department unveiled the criteria used to determine which 4,450 UBS customers risk disclosure to U.S. tax authorities as part of a deal to end a major tax evasion investigation against the bank.



The Internal Revenue Service had initially sought the names of some 52,000 American clients at UBS believed to be hiding nearly $15 billion. UBS resisted initially, but then agreed to disclose 4,450 names.



Those targeted in the disclosure also include Americans, living in the U.S. or elsewhere, who controlled offshore company accounts in 2001-2008, the Swiss government said.



Where there is evidence the clients engaged in "fraudulent behavior," such as by falsifying documents, the threshold for disclosure is lowered to 250,000 francs. Customers who earned an average of over 100,000 francs a year for at least three years will also be targeted.



The equivalent amounts in U.S. dollars vary widely, as the greenback lost over a third of its value against the Swiss franc during the period. One million francs bought about $600,000 in 2001, while seven years later they were worth over $900,000.



Switzerland agreed in August to hand over details about the accounts of up to 4,450 American suspected of serious tax evasion, after UBS acknowledged that its advisers had for years helped thousands of American clients hide billions of dollars from the Internal Revenue Service.



The move was widely seen as a break with Switzerland's storied tradition of banking secrecy for foreigners, and coincided with a broader effort to shake off the Alpine country's image as an uncooperative tax haven following sustained pressure from Washington and other major governments.



Swiss authorities have until the end of August 2010 to hand over the names to their U.S. counterparts.



UBS's reputation suffered considerably while it was under the spotlight for helping tax evaders, and investors are hoping the deal will allow the bank to regain customer trust.



Washington's ambassador to Bern, Donald S. Beyer Jr., said last week that some 9,000 Americans with offshore accounts in Switzerland had already come forward voluntarily to take advantage of a U.S. government amnesty program.



This could lower the number of Americans whose account details the Swiss have to hand over, according to the agreement.



The amnesty program promised no jail time and reduced penalties for Americans who turned themselves in for failing to report foreign bank accounts.



Swiss officials said the first 400 American clients will be selected for disclosure by the end of the week. A further 100 will be chosen by the end of the month. Affected customers can appeal the decision before Switzerland's top administrative court, which has the final say.
Most of the thousands of rich people whose UBS (UBSN.VX) bank accounts are to be handed over to U.S. authorities are suspected of serious fraud rather than simple tax evasion, Swiss authorities revealed on Tuesday.




The account details of about 4,450 people are due to be handed over to settle a bitter row over bank secrecy under a deal struck with the United States in August.



The saga has dented Switzerland's reputation as a center of banking discretion and threatened at one point to bring UBS to its knees.



The Swiss Justice Department said around 4,200 of the accounts are to be handed over on the grounds of "advanced and serious fraud." The category covers accounts with assets of at least 1 million Swiss francs ($986,200) and 100,000 francs in average revenues over at least three years, the Swiss Justice Department said.



About a further 250 accounts are suspected of a lesser offence -- of knowingly providing U.S. tax authorities with false information or setting up vehicles to dodge tax.



The submission of information on clients suspected of dodging U.S. taxes by stashing away money in secret accounts, promises to end years of investigation and uncertainty for UBS.



Submission of data to U.S. authorities applies to UBS accounts held between 2001 and 2008 by U.S. citizens resident in the United States.



Switzerland has claimed its banking secrecy remains intact, but some private bankers say it is no longer a selling point for its banks, which will need to offer other skills like wealth management and legacy planning to attract clients.



The country will also hand over the names of U.S. citizens holding offshore company accounts with UBS if they are suspected of tax fraud or similar, regardless of whether they were resident in the U.S. or elsewhere.



Earlier on Tuesday, UBS set an ambitious target for annual pretax profit of $15 billion, vowing to rebuild the loss-making bank and win back clients after the subprime crisis and U.S. tax row.