Page last updated at 21:28 GMT, Tuesday, 30 June 2009 22:28 UK

US seeks tax cheat names from UBS

UBS branch
UBS is the largest bank in a famously secretive system

The US has accused UBS of "systematically" violating US laws and insisted the Swiss bank reveal the names of suspected US tax cheats.

The US Justice Department is seeking the names of more than 50,000 US customers with Swiss accounts as part of a lawsuit against UBS.

UBS said that divulging the names would violate Swiss bank secrecy laws.

The row has tarnished the reputation of UBS, which sustained heavy losses from the credit crisis.

The court filing said that the Internal Revenue Service "seeks the identities of those account holders (and other account information) from a Swiss bank that regularly conducted business in secret within the United States, and systematically violated US law".

A court hearing has been scheduled for July 13.

Fraud

In February, UBS admitted to US tax fraud and agreed to pay $780m (£475m) as part of a provisional deal to settle charges that it helped thousands of US clients use Swiss bank accounts to evade taxes.

But US officials have argued this was not enough, and have since asked for the identities of all such account holders.

UBS spokeswoman Karina Byrne said the bank was "open to an appropriate solution" to avoid going to court, but said no settlement had yet been reached.

She repeated UBS's contention that disclosing the names of its US taxpayer customers would violate Swiss law and said that the dispute should be resolved by the two governments rather than in the courts.

Switzerland's largest bank, UBS, has asked a US court not to go ahead with a tax case involving more than 50,000 US customers with Swiss accounts.

UBS told a federal court in Florida it would violate Swiss laws on banking secrecy if it provided the information on its clients.

The US suspects 52,000 Americans of using UBS accounts to hide almost $15bn of assets and unpaid taxes.

Switzerland only recently signed up to global rules on bank data sharing.

It decided in March to ease banking secrecy and fully adopt accepted tax standards. The government agreed to begin negotiations with the US and Japan on tax co-operation.

Standing firm

Correspondents say the US case involving UBS is a sign it is stepping up its campaign against tax evasion - and directly challenging the tradition of Swiss banking secrecy.

The Internal Revenue Service, which administers tax in the US, has taken out a civil suit to force UBS to reveal the identities of 52,000 American customers suspected of holding accounts totalling $14.8bn.

The court would be substituting its own authority for that of the competent Swiss authorities, and therefore would violate Swiss sovereignty and international law
Swiss government statement

However, the bank has now told the court that it cannot hand over the information without violating Swiss law.

UBS says no specific evidence has been presented against its clients, meaning it is unable to waive bank secrecy rules.

"Switzerland's laws prohibit the release of confidential information to foreign governments when the request has not been made through authorised inter-governmental channels," the country's government said.

"If the court were to order UBS to produce evidence from Switzerland, and backed that order with coercive powers, the court would be substituting its own authority for that of the competent Swiss authorities, and therefore would violate Swiss sovereignty and international law," it added.

Earlier this year, UBS did cave in to US demands in a separate case involving about 300 customers.

The bank agreed to pay more than $700m in an out of court settlement.

US and Swiss officials have begun negotiations on a new tax treaty that Washington hopes will help it track tax evaders.

Swiss officials, who are also under pressure from the European Union, say it could take until the end of the year to reach an agreement.



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SEE ALSO
Switzerland agrees to US tax deal
19 Jun 09 |  Business
Swiss bank refuses US tax request
01 May 09 |  Business
Switzerland eases banking secrecy
13 Mar 09 |  Business
UBS pays $780m to settle tax case
18 Feb 09 |  Business

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