UBS to pay $780m, open Swiss bank records
WASHINGTON - Banking giant UBS has agreed to pay $780 million and turn over once-secret Swiss banking records to settle allegations it conspired to defraud the US government of taxes owed by big clients.
As part of the deal struck in federal court in Fort Lauderdale, Fla., UBS has made the unprecedented step of agreeing to immediately turn over to the US government account information for US customers of the bank's cross-border business.
In doing so, federal authorities have struck a big crack in Switzerland's vaunted bank secrecy laws.
UBS will pay $780 million in fines, penalties, interest, and restitution for conspiring to create sham accounts to hide the assets of US clients from the US government.
"We accept full responsibility for these improper activities," Peter Kurer, the chairman of Swiss-based UBS AG, said in a statement.
"Client confidentiality, to which UBS remains committed, was never designed to protect fraudulent acts or the identity of those clients, who, with the active assistance of bank personnel, misused the confidentiality protections," he said yesterday.
According to US officials, when an acquisition in 2000 of a US company brought UBS a host of new, American clients, the bank set about to evade new reporting requirements for those clients. To do so, UBS executives helped US taxpayers open new accounts under sham entities.
Prosecutors contend UBS executives used encrypted software and other counter-surveillance techniques to prevent anyone from detecting they were actively marketing such Swiss bank secrecy - and tax evasion - to American taxpayers. The clients, in turn, filed false tax returns that omitted the income they earned in their Swiss accounts, according to the court papers.