Crunch time for $, closure of Americans' Swiss Accounts

teggy · Jul 11th, 2009, 03:43 AM

UBS has closed 14,000 American accounts, still opposes IRS probe
By Kevin McCoy
USA TODAY
UBS has closed more than 14,000 accounts owned by Americans as it complies with a federal court settlement of charges it conspired to help the clients evade U.S. taxes, a top official of the Swiss bank said Wednesday.
But Mark Branson, chief financial officer of UBS' global wealth management division, repeated the bank's opposition to an IRS lawsuit seeking the identities of thousands of other American account holders.
Testifying at hearing by the Senate Permanent Subcommittee on Investigations, Branson said the bank closed the accounts under court settlement terms that require UBS to stop providing accounts to Americans whose holdings are not disclosed to the IRS.
Branson also said UBS has given federal authorities names and account information of an unspecified number of the bank's American clients "who appear to have engaged in tax fraud or the like."
But he said UBS is fighting so-called John Doe summonses the IRS filed for comparable information on thousands of other U.S. clients because disclosure would violate Swiss bank-secrecy laws.
UBS has about 47,000 American-owned accounts that have not been declared to the IRS, Branson said. But those accounts generally do not contain securities, which means there's no requirement that they be disclosed under the tax treaty approved by the U.S. and Switzerland, he said.
"UBS believes this dispute should be resolved through diplomatic discussions between the two governments, and we will continue to support actively such discussions," Branson said.
Separately, answering questions from subcommittee Chairman Carl Levin, D-Mich., Branson said he had no knowledge of a 2000 UBS memo in which Baker & McKenzie, a Chicago-based law firm, appeared to advise the bank about tactics that could help its American clients avoid IRS reporting requirements.
The law firm on Tuesday declined to comment on the memo, saying it does not identify or discuss its clients.
Levin, frustrated by what he described as international regulatory gaps that facilitate federal tax evasion, said he will seek congressional approval of new legislation that would tighten IRS reporting requirements. Treasury Secretary Timothy Geithner signaled Obama administration support on Tuesday.
"It is offensive to us that our laws are being circumvented," Levin said. "We are going to do everything we can to take away that ill-gotten gain."

USATODAY.com

Call it paranoia if you will, but isn't IRS breaking tradition by going after privately owned bank accounts which are outside American Jurisdiction? Swiss banks have long been favored and known for their "tell nothing" policy of privacy.

What do you predict as the future of Swiss banks as far as American customers are concerned? Will American accounts be shut down, and continue to be denied Swiss financial services due to fact that there is much pressure exerted on Swiss Govt. to comply with US Govt.?

Act of desperation, or a refined strategy at work?