One day after UBS agreed to hand over the names of 250 wealthy US account holders as part of a $780 million settlement with US prosecutors on a tax-evasion probe, the Justice Department sued the Swiss banking giant to hand over 52,000 more.
The Feds have been on UBS’ tail since 2007 when a former executive told them the bank was representing to US customers that it didn’t have to disclose their identities to the IRS, according to the Wall Street Journal.
US prosecutors believe UBS has stashed a minimum of $20 billion and perhaps several times that, on behalf of US clients. The accounts generated a minimum of $200 million in annual revenues for the bank.
It was the first time in centuries that Swiss regulators permitted a bank to reveal account holders’ identities. Some Swiss lawmakers opposed the move on grounds it would destroy the Swiss banking industry.
“Client confidentiality, to which UBS remains committed, was never designed to protect fraudulent acts” such as violating the US tax code, UBS Chairman Peter Kurer told the Journal.
UBS acknowledged as part of the settlement that some of its managers knowingly cooked-up a scheme to assist US taxpayers looking to evade paying taxes.
The original 250 names had been identified in conjunction with a criminal investigation, but the larger roster is being sought by Justice as part of a separate civil probe.
The marked expansion in the number of names sought by US officials could be disastrous for the Swiss financial sector if large numbers of those 52,000 accounts turn out to involve tax evasion. Swiss banks generate 10% of the nation’s GNP and employ 5% of the work force.