STAMFORD: The United States indicted Wegelin, the oldest Swiss private bank, on charges that it enabled wealthy Americans to evade taxes on at least US$1.2bil hidden in offshore bank accounts, according to the US Justice Department.
The announcement, by federal prosecutors in Manhattan, represents the first time an overseas bank has been indicted by the United States for enabling tax fraud by US taxpayers.
The indictment said the US government had seized more than US$16mil from Wegelin’s correspondent bank, the Swiss giant UBS AG, in Stamford, Connecticut, via a separate civil forfeiture complaint. Because Wegelin has no branches outside Switzerland, it used correspondent banking services, a standard industry practice, to handle money for US-based clients.
The charges against Wegelin, of fraud and conspiracy, provide a rare glimpse into the world of Swiss private banking in the wake of a crackdown on UBS AG. In 2009, UBS paid US$780mil and entered into a deferred prosecution agreement with the Justice Department over charges it engaged in fraud and conspiracy by enabling scores of Americans to evade taxes through its private bank.
The bank later turned over the names of more than 4,500 clients, a watershed in Swiss bank secrecy, which protects the confidentiality of clients and their data.
The indictment signals a ramping up of pressure on 10 other Swiss banks under investigation by the Justice Department, including Credit Suisse, Julius Baer and Basler Kantonalbank.
A week ago, Wegelin – founded in 1741 – effectively broke itself up by selling the non-US portion of its business.
The indictment represents the latest blow to the tradition of Swiss bank secrecy in a long-running US crackdown on tax dodgers.
Switzerland is seeking a global solution for its entire banking industry, not just the 11 banks under criminal scrutiny.
On Tuesday, the Swiss finance ministry handed US authorities encrypted data on bank employees who served US clients suspected of dodging taxes, and said it would only provide the key to decipher the data once the row was settled.
The US Justice Department said Wegelin “affirmatively decided to capture for Wegelin the illegal US cross-border banking business lost by UBS and deliberately set out to open new undeclared accounts for US taxpayer-clients leaving UBS,” the indictment said. – Reuters
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Wegelin charged with helping to evade taxes