'No Questions Asked' Appeal of Secret Swiss Bank Accounts Under Threat

US citizens are set to appeal against the Swiss governments decision to share details of formerly private UBS investments with the IRS.

US clients of bank-to-the-super-rich UBS are planning to take to the courts with an appeal against plans by the Swiss government to reveal details of their once-secret bank accounts to US tax investigators.

In an unprecedented step, the Swiss government agreed to release private data relating to UBS accounts held by American citizens suspected of tax evasion earlier this year. 

At the present time the Swiss banking sector is under obligation to share private client data only when there is clear evidence that a fraud has been committed.

This move has done little to shore up confidence in the country’s damaged banking sector previously renowned for its secrecy laws.  It is particularly detrimental to UBS not least because the bank is already struggling with its reputation after making more credit-crunch related write downs than any other bank in Europe.

Should UBS be forced to share account information with the IRS (Internal Revenue Service) the ‘no questions asked’ appeal of the Swiss banking system will be lost to foreign investors forever. What’s more, both UBS and other prestigious Swiss banks are likely to come under a deluge of enquiries from other countries relating to suspected tax evasion.

The clients who are pursuing the appeal through the courts have thus far chosen to remain nameless. However according to their lawyers they are innocent of any wrong doing and invested with the bank through legal channels alone, albeit those designed to exploit loopholes in the US tax system.

According to reports, since the Swiss governments plans for cooperation were made public the IRS have seen a significant increase in the number of US citizens applying for amnesty through the Internal Revenue Service voluntary disclosure programme. This scheme frees individuals from the risk of criminal prosecution for tax evasion should they declare any outstanding amounts owed and agree to pay in full with penalties. 

Last week saw the US Department of Justice charge UBS Chairman and Chief of global wealth management Raoul Weil with using his position to assist more than 20,000 American clients to conceal $20billion worth of funds. He has yet to answer the charges and is believed to be hiding in Switzerland.

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