U.S. Settles With Swiss Bank UBS On Accounts
ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MELISSA BLOCK, host:
And I'm Melissa Block.
Swiss banks are famous for strictly guarding information about their customers' accounts. Well, now that veil of secrecy has been pierced. The U.S. and the Swiss have negotiated an agreement. It's part of a crackdown by the IRS on wealthy Americans who hide their assets in overseas accounts.
SIEGEL: The treaty requires the Swiss bank UBS to give up the names of 4,450 accounts owned by U.S. citizens - and that could lead to prosecutions for tax evasion.
NPR's Jim Zarroli has our story.
JIM ZARROLI: Under the agreement, the IRS will formally ask the Swiss government for information about thousands of accounts tied to U.S. citizens. And the Swiss in turn will pass on the request to UBS. Although the account holders can formally appeal the release of their names, UBS is ultimately expected to comply. Alex Raskolnikov, professor of law at Columbia University says, in the long tradition of Swiss bank secrecy, an agreement like this is unprecedented.
Professor ALEX RASKOLNIKOV (Law, Columbia University): To my knowledge, this is the first time anything like that, certainly on that scale, or, really, anything like that at all has ever happened. So this is very significant.
ZARROLI: The agreement announced today comes after a lengthy criminal investigation into UBS' American operations. One bank employee has told authorities that the bank regularly sent representatives to social and sporting events in the United States to meet rich people. And he said, bank employees were urged to tell potential clients, they could use the bank to hide their assets.
U.S. officials went to court to force UBS to release its clients' names. But UBS insisted it was barred from doing so by Swiss banks secrecy laws. James Nason, a spokesman for the Swiss Banking Association, says today's agreement resolves the dispute.
Mr. JAMES NASON (Spokesman, Swiss Banking Association): UBS was in a very, very difficult position. And I think this is a very sensible solution. And we find this agreement very convincing.
ZARROLI: Under the agreement, UBS will also have to send letters to clients advising them that the IRS wants information about their accounts. U.S. officials are hoping that will encourage tax evaders to step forward. Attorney Robert Katzberg says he's already hearing from wealthy clients who want to turn themselves in to avoid criminal prosecution. Katzberg says the UBS investigation is going to have far-reaching effects.
Mr. ROBERT KATZBERG (Attorney): Well, we'll put it this way. Let's assume that you're an American taxpayer who is contemplating hiding money overseas. Are you going to put money in a Swiss bank now?
ZARROLI: And Katzberg says this is part of the U.S. strategy against the entire Swiss banking industry.
Mr. KATZBERG: What's going on with UBS is merely the template for all Swiss banks. If you think the United States government is stopping at UBS, you're wrong.
ZARROLI: But the IRS may have more trouble going after other Swiss banks, because it doesn't have the same kind of evidence against them. And even if the IRS wins this battle against Swiss banks, the war will go on. There are still plenty of other countries in Asia and the Caribbean where foreign money can be concealed. And Americans who want to hide from the tax collector have other places to do it.
Jim Zarolli, NPR News, New York.