U.S. Given A Look at Swiss Bank Accounts
Monday, November 10, 2008
The U.S. government has chipped new holes in the secrecy of Swiss bank accounts, obtaining the names of American clients of the banking giant UBS as part of an investigation into the use of foreign banks to evade taxes.
In an unusual move, the Swiss have turned over information on about 70 UBS clients for use by Justice Department investigators, a source close to the case said.
The Swiss were responding to a Justice Department request for information on Americans who held "undeclared" accounts at UBS in Switzerland -- accounts that they had not revealed to the Internal Revenue Service, the source said.
Meanwhile, criminal investigators have obtained the names of an additional 30 or so American holders of undeclared UBS accounts from other parties, and people with inside knowledge of the bank have been giving federal prosecutors information about UBS's conduct, said the source, who spoke on condition of anonymity because of the matter's sensitivity.
Switzerland has a history of divulging information on bank clients when foreign law enforcement authorities present evidence of criminal activity by specific depositors. The recent disclosures are noteworthy because the Justice Department was asking for information on people whose names it did not have, the source said. The names and account information give prosecutors fresh leads to pursue.
In addition to investigating U.S. taxpayers with secret accounts, the Justice Department has been probing UBS's serving of U.S. clients from Switzerland, a UBS executive testified in July. The Securities and Exchange Commission and the IRS have been conducting related investigations.
While the investigations involve UBS accounts based in Switzerland, the bank's extensive U.S. operations leave it more exposed than many other foreign banks to action by U.S. regulators and law enforcers.
UBS spokesman Mark Arena yesterday declined to comment on the disclosures. Earlier in the week, Arena talked generally about how the company handles such matters.
"Client data are generally protected from disclosure under Swiss law. Such protection does not apply when disclosure of client data occurs as a result of requests to Swiss authorities for administrative assistance through established legal channels," Arena said by e-mail.
The 70 or so client names have been turned over to the U.S. government over recent months, the source said. It was unclear whether they were forwarded to the U.S. government by UBS, the Swiss government or a combination. The source said the disclosures were generally authorized by the Swiss government.
Swiss Embassy spokeswoman Emilija Georgieva declined to comment on the matter yesterday except to say, "We have been asked to do something and we are working on that and it's ongoing."
The U.S. government's focus on UBS became clearer in June, when a former UBS employee pleaded guilty to helping a California real estate developer evade millions of dollars in taxes. The former banker, Bradley Birkenfeld, has been cooperating with the Justice Department, and his sentencing has been delayed twice for the government to take maximum advantage of his help, according to court records.