Troubled Swiss investment bank faces a US investigation into wealthy clients’ offshore accounts and tax evasion
LONDON – UBS is under investigation by the US Department of Justice (DoJ) over allegations that it created offshore accounts that allowed clients to avoid taxes. The probe comes after a former UBS banker, Bradley Birkenfeld, admitted last month to helping wealthy US customers evade $7 million in tax.
The DoJ is seeking the southern Florida Federal District Court’s approval for the Internal Revenue Service (IRS) to issue a summons requiring UBS to reveal key information. The Swiss investment bank is co-operating fully with the authorities.
“UBS takes this matter very seriously and is working diligently with both Swiss and US government authorities, consistent with Swiss law and the legal frameworks for intergovernmental co-operation and assistance,” says UBS in a statement.
UBS has been beset by heavy subprime losses in the past year, including a loss of $11 billion for the first quarter of 2008 followed by the announcement of 5,500 job losses.
Swiss officials held talks with US counterparts last week over the allegations. Birkenfeld has claimed he hid over $200 million in overseas accounts, robbing the IRS of over $7 million in revenue.
Birkenfeld has said over $20 billion remains in undeclared Swiss accounts controlled by US residents, which the DoJ is now very interested in uncovering. It has been reported that up to 20,000 US citizens could be involved.
In a statement the IRS says its investigation aimed to “detect wealthy individuals who don't pay their taxes as well as provide details about how advisers facilitate this abuse”.
More on Regulation
ABA calls for better ways to compare bank capital between countries
US regulator will pursue a quicker route to exempt foreign CCPs
ECJ decision means new problems for data preservation
Discussion crystallises over regulatory streamlining
Sign up for Risk.net email alerts
Sponsored webinar: IBM
Watch highlights of this year's London conference
Operational risk and the challenges of defining and dealing with conduct risk
Watch discussions and speakers from our North America conference
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.