Swiss banks closing Americans’ accounts amid US pressure
GENEVA - Swiss banks are shutting the accounts of Americans as the US Internal Revenue Service accelerates the hunt for tax dodgers.
UBS AG and Credit Suisse Group AG, the country’s biggest banks, have told Americans to move their money into specially created units registered in the United States, or lose their accounts. Smaller private banks such as Geneva-based Mirabaud & Cie. are closing all accounts held by US taxpayers.
While the banks declined to say how many people are affected, more than 5 million Americans live abroad, including about 30,000 in Switzerland, according to estimates from American Citizens Abroad in Geneva. Swiss banks must register with the Securities and Exchange Commission to provide services for those customers.
“My bank doesn’t want to do that, so we wouldn’t accept an investment account for a US person,’’ said Pierre Mirabaud, the chairman of Mirabaud & Cie. and the Swiss Bankers Association, during a lunch at the American International Club of Geneva.
SEC registration means clients don’t enjoy the protection of Swiss banking secrecy laws, which make it a crime for money managers to disclose the names of clients without their consent. Switzerland said in March it would cooperate with international tax evasion probes after Zurich-based UBS admitted helping US clients avoid taxes.
The IRS has since increased pressure on Americans to disclose offshore accounts as it seeks to recoup an estimated $50 billion in unpaid taxes. The agency set a deadline of Sept. 23 for taxpayers to declare all foreign accounts or face possible criminal prosecution that could result in up to 10 years in prison and $500,000 in penalties.
The United States has also proposed increasing reporting and oversight requirements for so-called qualified intermediaries - foreign banks that withhold taxes on behalf of the IRS. That may increase the cost of compliance and the risk of violating US laws, said Charles C. Adams, managing partner at the law firm Hogan & Hartson LLP in Geneva.
Sandra Dysli, an American who has lived in Geneva for 40 years, said Bank Zweiplus AG, the Zurich-based joint venture of Basel-based Bank Sarasin & Cie. and AIG Private Bank, and a Geneva branch of Raiffaisen International Bank-Holding AG refused to open investment accounts for her.
“I was told that I cannot legally be a client because I’m an American,’’ said Dysli, who retired from the United Nations in 2001. “I couldn’t get an investment account and had everything in cash.’’
UBS said last July it planned to stop all offshore banking and investment services for people subject to US taxes, except through US-registered units.
The company notified US clients in a March 27 letter that it would close accounts within 45 days. Customers were asked to transfer assets to entities registered with the SEC, and asked to consult an adviser about the US tax consequences, according to a copy of the seven-page letter seen by Bloomberg News.
“UBS will no longer be able to continue to provide services to you through your current account,’’ the letter said.
A spokesman for UBS, Dominique Gerster, declined to comment on how much progress the bank had made in moving US clients or closing their accounts.
US citizens must file tax returns, report offshore accounts that contain more than $10,000, and pay tax on any income earned, no matter where they live.
