As reported by the International Business Times and Reuters, the U.S. and Switzerland entered an agreement last week under which UBS, Union Bank of Switzerland, would disclose the identities of approximately 4,500 to 5,000 holders of secret Swiss bank accounts.
The Internal Revenue Service had filed suit against UBS in February in the U.S. District Court for the Southern District of Florida, accusing UBS of aiding and abetting U.S. citizens in tax evasion and demanding disclosure of the identities of approximately 52,000 U.S. citizens who hold Swiss accounts, upon which the Swiss government ordered UBS to disclose the identities of 250 account holders, bypassing UBS' customer appeal process, in order to settle criminal charges. UBS also paid the U.S. a $780 million fine. The Swiss People's Party has called the U.S. government's actions "blackmail." However, after negotiations with the U.S., the Swiss government held an extraordinary special session last Monday to discuss settlement of the case.
The agreement between the U.S. and Switzerland will supposedly leave Switzerland's banking secrecy intact and UBS will not have to pay a fine. However, under the terms of the agreement, Switzerland is obliged to assist the U.S. if the U.S. seeks its help in a criminal investigation. Swiss accounts below a certain size will not have to be reported, however the precise limit will be kept confidential, leaving account holders without notice as to whether they might be vulnerable. Account holders threatened with disclosure would, however, be able to challenge disclosure in Swiss courts. The U.S. government supposedly backed off its original demands because the U.S. Treasury did not want to cause UBS to fail.
The total amount of fines which the 4,500-5,000 U.S. citizens are estimated to be charged is estimated at $3.74 billion. On April 2, Steven Michael Rubenstein of Boca Raton, Florida, an accountant for a yacht company, became the first U.S. citizen to be arrested for tax evasion as a result of UBS' disclosures.
UBS is the world's largest manager of private wealth assets, and is the second-largest bank in Europe in both market capitalization and profitability. UBS operates in 50 countries nationwide, including the U.S., and has offices across the country. Since 2007, after UBS incurred huge losses, the bank's single largest sharholder has been the Government of Singapore Investment Corporation. Last November, Raoul Weil, Chairman and CEO of UBS' Global Wealth Management and Business Banking and member of UBS' Group Executive Board, was indicted in the Southern District of Florida.
