Swiss Bank UBS Agrees to Pay $780 Million in Settlement

Washington D.C. - February 18, 2009

In a significant blow to tax evasion, Swiss bank UBS has agreed to pay $780 million to settle claims by the US government that it helped thousands of Americans hide millions of dollars in secret accounts.

Background

For years, UBS had been accused of helping wealthy Americans evade taxes by hiding their money in Swiss bank accounts. The allegations were sparked by the arrest of Bradley Birkenfeld, a former UBS banker who blew the whistle on the bank’s tax evasion scheme in 2008. Birkenfeld told investigators that UBS had helped thousands of Americans hide their money in secret accounts and earned millions of dollars in fees from these clients.

Settlement Details

As part of the agreement, UBS has agreed to:

• Disclose the identities of thousands of American clients who had secret accounts with the bank
• Pay a $200 million fine
• Face no criminal charges

Efforts to Combat Offshore Tax Evasion

The US government has been cracking down on offshore tax evasion in recent years. The passage of the Foreign Account Tax Compliance Act (FATCA) in 2010 requires foreign banks to disclose the identities of American account holders and report their financial information to the IRS.

Other Swiss Banks Accused of Tax Evasion

UBS is not the only Swiss bank accused of helping Americans evade taxes. Several other Swiss banks have also been accused, and some have agreed to pay significant fines to settle claims.

Conclusion

The UBS settlement is a major victory for the US government’s efforts to combat offshore tax evasion, but it is likely to be just the beginning of a larger effort to combat this type of fraud.