The end of Swiss banking as we knew it: UBS opens its secret files

[Winehole23]

A Swiss Bank Is Set to Open Its Secret Files (http://www.nytimes.com/2009/02/19/business/worldbusiness/19ubs.html?_r=2&hp)

By LYNNLEY BROWNI (http://query.nytimes.com/search/query?ppds=bylL&v1=LYNNLEY%20BROWNING&fdq=19960101&td=sysdate&sort=newest&ac=LYNNLEY%20BROWNING&inline=nyt-per)NG








In the hush-hush world of Swiss banking, the unthinkable is happening: secrets are spilling into the open.

(http://www.nytimes.com/2009/02/19/business/worldbusiness/19ubs.html?_r=2&hp#secondParagraph)Department of Justice Press Release (http://www.usdoj.gov/opa/pr/2009/February/09-tax-136.html)





UBS (http://topics.nytimes.com/top/news/business/companies/ubs_ag/index.html?inline=nyt-org), the largest bank in Switzerland, agreed on Wednesday to divulge the names of well-heeled Americans whom the authorities suspect of using offshore accounts at the bank to evade taxes. The bank admitted conspiring to defraud the Internal Revenue Service (http://topics.nytimes.com/top/reference/timestopics/organizations/i/internal_revenue_service/index.html?inline=nyt-org) and agreed to pay $780 million to settle a sweeping federal investigation into its activities. It is unclear how many of its clients’ names UBS will divulge. Federal prosecutors have been examining about 19,000 accounts at the bank, but UBS ultimately may disclose the identities of only a few hundred customers.
But to some, turning over any names at all heralds the end of the secret Swiss bank account, whose traditions date to the Middle Ages.



“The Swiss are saying that this is the end of Swiss banking as they knew it,” said Jack Blum, an offshore tax specialist. “Nobody will trust the security of the Swiss bank account.”



As part of the settlement, UBS agreed to cooperate with a broad summons issued by the Justice Department to turn over the names. Under the terms of a so-called deferred prosecution agreement, the bank and its executives could be indicted if UBS didn’t identify the customers.



UBS has said it is closing the offshore accounts of its American clients. But under the deal with the United States authorities, the bank must provide periodic written evidence of that to prosecutors. UBS earned $200 million annually from the business.


Prosecutors suspect that from late 2002 to 2007, UBS helped American clients illegally hide $20 billion, letting them evade $300 million a year in taxes.



In a striking admission, UBS said that from 2000 through 2007, some of its private bankers and managers had “participated in a scheme to defraud the United States” and the I.R.S. by helping American clients set up and conceal offshore accounts. The scheme involved falsifying or not properly obtaining or filing certain tax forms required of both the bank and its clients.
UBS’s offshore private banking business once employed some 60 private bankers in Lugano, Zurich and Geneva. Prosecutors claimed UBS referred clients to lawyers and accountants who set up secret offshore entities to conceal assets from the I.R.S.


UBS urged some American clients to destroy records and to stash watches, jewelry and artwork that they had bought with money hidden offshore in safe deposit boxes in Switzerland. The bank also encouraged them to use Swiss credit cards so the I.R.S. could not track purchases. In a statement on Wednesday, Peter Kurer, the chairman of UBS, said that “UBS sincerely regrets the compliance failures in its U.S. cross-border business that have been identified by the various government investigations in Switzerland and the U.S., as well as our own internal review. We accept full responsibility for these improper activities.”



Marcel Rohner, the group chief executive of UBS, said in a statement that “it is apparent that as an organization we made mistakes and that our control systems were inadequate.”



In January a senior UBS executive, Raoul Weil, was declared a fugitive, two months after being indicted by a federal judge in connection with the investigation of the bank. Mr. Weil, a Swiss citizen, oversaw the cross-border private banking operations from 2002 to 2007.


UBS had fiercely resisted turning over the names, even after some executives were indicted and implicated in the offshore private banking business. Swiss law distinguishes broadly between tax avoidance, tax evasion and tax fraud. Unlike in the United States, tax evasion is not a criminal offense under Swiss law.


The move by UBS to settle the case, on the eve of a Senate subcommittee hearing next Tuesday on the matter, signals how close the bank came to being indicted for not cooperating with prosecutors. Indictment is a near-certain death knell for corporations.


Of the $780 million that UBS will pay, $380 million represents disgorgement of profits from its cross-border business. The remainder represents United States taxes that UBS failed to withhold on the accounts. The figures include interest, penalties and restitution for unpaid taxes
As part of the deal, UBS also entered into a consent order with the Securities and Exchange Commission in which it agreed to charges of having acted as an unregistered broker-dealer and investment adviser for Americans.



The settlement caps a painful run for UBS, which suffered more than $50 billion in losses in the collapse of the American mortgage market and received a $60 billion bailout from the Swiss government last October.
The bank will not have to pay additional fines and penalties, which could have brought the deal to more than $1 billion. People briefed on the issue said the banking crisis and the recession were factors in this decision by prosecutors.

[ratm1221]

Sweet, I say deport the offenders. After they pay their back taxes of course.

[LnGrrrR]

A question: Why is it illegal to store your money in another country, and therefore, not get taxed by the States on it?

[hater]

wow it's a miracle. they are actually going after rich ppl?

[LockBeard]

I wonder how many millions the Kennedy's have kept from Uncle Same through trust fund loopholes?

[The Reckoning]

meh. they still have good watches and pocket knives.

[Kermit]

A question: Why is it illegal to store your money in another country, and therefore, not get taxed by the States on it?

I'm guessing that if you earned that money in the United States, they want the tax.

[TDMVPDPOY]

I'm guessing that if you earned that money in the United States, they want the tax.

people dont disclosed that sort of shit when it comes tax time, since the account in another country dont ask you for tax number.....where the IRS can track the number in all financial institutions in your country.

[LnGrrrR]

I'm guessing that if you earned that money in the United States, they want the tax.

Define "earned" though... sold, I'm guessing? I mean, what if I make goods overseas, then sell them to US citizens on the internet (with my server hosted in a non-US area), then bank off-shore. Would I even be liable to pay any taxes?

[MannyIsGod]

This is extremely overblown. They gave out something like 200 names. That's pretty much nothing.

[Winehole23]

The IRS just filed a new suit (http://www.palmbeachpost.com/localnews/content/business/epaper/2009/02/19/0219ubs.html)to get 52,000 more names.

[Winehole23]

A question: Why is it illegal to store your money in another country, and therefore, not get taxed by the States on it?If you never get caught it isn't. Discretion is the soul of valor, eh?

In a valorous attempt to protect their preciously bought gain from the amercements of a presumptuous and imposing government, the well to do and very many others squirrel their wealth away secretly. smeagal, are you listening?

Yet others, like me and my good buddy Tim Geithner, merely forget to pay from time to time. :lol

Consider this: the primary forensics detect no record of trading in the Madoff affair. It may well have been a pure ponzi. How long did it last again?

[Trainwreck2100]

A question: Why is it illegal to store your money in another country, and therefore, not get taxed by the States on it?

Cause you made that money here, and horded it away so it couldn't be taxed, when it should be taxed cause you made it here.

[LnGrrrR]

Cause you made that money here, and horded it away so it couldn't be taxed, when it should be taxed cause you made it here.

Yes, but define "made it here". If you're selling from an off-shore site to Americans, does that count as "making it here"?

[RandomGuy]

A question: Why is it illegal to store your money in another country, and therefore, not get taxed by the States on it?

Income is income.

If foreign income was not taxable, then all I had to do was to simply take all of my money, invest it someplace stable like Europe or Japan, and sit back and grow wealthy on that income without ever paying income taxes. All of my capital/savings would benefit some other country, because I would build a rental house or similar means of income production.

Most foreign governments have tax treaties where the government there pledges not to tax that income if the US does, and vice/versa or that some tax credit is given for taxes paid in another country, i.e if you pay 2000 in taxes to that goverment, you get a 2000 credit towards your taxes here.

It is not illegal to put your money in other countries, but you still must pay income taxes on the income it generates.

[DarkReign]

I'd be very interested to see the entirety of their clientele list.

Im thinking Senators/Congressmen are prone to show up here and there.

[TDMVPDPOY]

a couple of months ago me and my friends were drinkn and sittin around talkin about whether to buy gold or foreign exchange

one friend had a friend who worked in some swiss bank recommended to buy gold at the time cause it was going to skyrocket...while the other a BA recommended to buy USA currency...and we all know how it all went today. But buying gold is no point if ur not buying bullion gold, fkn ounces dont do shit or have good turn over.
while the other is buyin gold, the BA took on more investments during these economic times.....

[RandomGuy]

a couple of months ago me and my friends were drinkn and sittin around talkin about whether to buy gold or foreign exchange

one friend had a friend who worked in some swiss bank recommended to buy gold at the time cause it was going to skyrocket...while the other a BA recommended to buy USA currency...and we all know how it all went today. But buying gold is no point if ur not buying bullion gold, fkn ounces dont do shit or have good turn over.
while the other is buyin gold, the BA took on more investments during these economic times.....

Here's the thing about gold:

If you bought $300 worth of gold in 1980, today you would have: $1000.

Tidy profit of $700 or 233%.

If you bought $300 worth of say, Ford common stock, you would have: $57,000+, if my memory of my calculations is correct.

56600/300= 18,867% profit.

57>1

It is always better to have 25 years worth of ownership of positive cash flows than to have 25 years worth of ownership in a static asset.

The problem with gold is that it is at some pretty historic highs at the moment and has a rather thin demand curve.

If you think the market is going down, and you have $10000 to invest, then invest $1000 per month for ten months, and keep up the investment.

You don't have to worry about when it will start going up again and missing out on that uptick. Dollar cost averaging baby.

[TDMVPDPOY]

If you think the market is going down, and you have $10000 to invest, then invest $1000 per month for ten months, and keep up the investment.

You don't have to worry about when it will start going up again and missing out on that uptick. Dollar cost averaging baby.

unless the shares you bought the company goes busts....sometime now and in future, than ur notes are worth shit all.

The same BA friend had notes in a company that was trading very well b4 the recession...was trading at $35...lol he bought them at $30-35 then recession came along and now the prices of them shares went down to under 50cents and i think they are in administration atm......another friend jumped onto the bandwagon at one point when it was trading at $5 and bought in 5k worth of shares and saw it not recover around its peak and bombed out...i think the wanker lost his investment capital, shouldve pulled out.....

i also had a few friends who worked in banks, salary packages with shares lmao...now those shares are worth shit compared to what they were at the same time last year.....its probably even lesser than what the banks were paying these guys per hour for there job position.....:lmao

if ima invest, i buy utility company stocks, cause people will have to pay their gas/water/electricity bills anyway in any event

[RandomGuy]

unless the shares you bought the company goes busts....sometime now and in future, than ur notes are worth shit all.

The same BA friend had notes in a company that was trading very well b4 the recession...was trading at $35...lol he bought them at $30-35 then recession came along and now the prices of them shares went down to under 50cents and i think they are in administration atm......another friend jumped onto the bandwagon at one point when it was trading at $5 and bought in 5k worth of shares and saw it not recover around its peak and bombed out...i think the wanker lost his investment capital, shouldve pulled out.....

i also had a few friends who worked in banks, salary packages with shares lmao...now those shares are worth shit compared to what they were at the same time last year.....its probably even lesser than what the banks were paying these guys per hour for there job position.....:lmao

if ima invest, i buy utility company stocks, cause people will have to pay their gas/water/electricity bills anyway in any event

You are exactly right about that. If the company goes under your investment is worthless.

Larger companies tend to fail at much lower rates than small ones, though. You can limit your risk of this by only investing in large companies, and as you mentioned, utilities.

Everyone will give money to say, Coke, Inc. or Pespi, Inc. but no one will give money to RandomGuy's Itty Bitty Bottling Company, Inc. without demanding a a lot of compensation for their risk.

This is why it is cheaper/easier for large companies to acquire investment capital, by the way.

Also, stockholders ask for a higher rate of return then lenders for the very reason that if the company goes under, they stand in line behind the bondholders for the leftovers.

This risk means that stock "costs" more to a company than debt. When a company is considering whether to get money for a new factory/building, they generally prefer to borrow the money, rather than issue stock. There is some good balance though to doing both, and most companies try to maintain a specific ratio of equity to debt. ( the specific terms are t
"capital structure" for that ratio, and they use the weighted average cost of capital to determine if a project will make money)

[LockBeard]

Gold is more like insurance than an investment.

I'll be very pissed when I send off the rothIRA check this year as I have 0 confidence in the system/future impact of so much government interaction when dealing with growth, but 40 years of compound interest is still a sexy little thang that The Lockbeard wants a piece of.

[LnGrrrR]

Income is income.

If foreign income was not taxable, then all I had to do was to simply take all of my money, invest it someplace stable like Europe or Japan, and sit back and grow wealthy on that income without ever paying income taxes. All of my capital/savings would benefit some other country, because I would build a rental house or similar means of income production.

Most foreign governments have tax treaties where the government there pledges not to tax that income if the US does, and vice/versa or that some tax credit is given for taxes paid in another country, i.e if you pay 2000 in taxes to that goverment, you get a 2000 credit towards your taxes here.

It is not illegal to put your money in other countries, but you still must pay income taxes on the income it generates.

So there's no point in putting your money into a foreign bank, unless A) the interest/perks are great, B) you're concerned about the well-being of American banks or C) you can hide it there.

Thanks!

[LnGrrrR]

Here's the thing about gold:

If you bought $300 worth of gold in 1980, today you would have: $1000.

Tidy profit of $700 or 233%.

If you bought $300 worth of say, Ford common stock, you would have: $57,000+, if my memory of my calculations is correct.

56600/300= 18,867% profit.

57>1

It is always better to have 25 years worth of ownership of positive cash flows than to have 25 years worth of ownership in a static asset.

The problem with gold is that it is at some pretty historic highs at the moment and has a rather thin demand curve.

If you think the market is going down, and you have $10000 to invest, then invest $1000 per month for ten months, and keep up the investment.

You don't have to worry about when it will start going up again and missing out on that uptick. Dollar cost averaging baby.

You should see the upward curve for palladium... wished I'd invested in that. Well, I wish I had been born early enough to invest in that. :D

[Winehole23]

So there's no point in putting your money into a foreign bank, unless ... you're concerned about the well-being of American banks In the US lot of banks in the middle are doing alright and continue to service the creditworthy.

[LnGrrrR]

In the US lot of banks in the middle are doing alright and continue to service the creditworthy.

Oh I have no doubt about that. I actually bank through a credit union. I was just listing that as a possible reason for banking overseas instead of stateside.

[Winehole23]

Oh I have no doubt about that. I actually bank through a credit union. I was just listing that as a possible reason for banking overseas instead of stateside.WH23 and AudreysII-VI also use a credit union. But yeah, I'm sure you can find better rates and better banks somewhere else, too.

[RandomGuy]

You should see the upward curve for palladium... wished I'd invested in that. Well, I wish I had been born early enough to invest in that. :D

If a metal becomes industrially useful that will happen, simply because of the demand. I think (not really sure at all tho') that palladium has had some new industrial process that requires it drive the price.

[Winehole23]

Switzerland's oldest bank is to shut down after it admitted to helping American clients evade $1.2bn in taxes.
Wegelin becomes the first foreign bank to plead guilty to tax evasion in the U.S and must pay $57.8m (£36m) in fines to the US authorities.



Once it has paid off its fines it will 'cease to operate as a bank.'


The bank, established in 1741, confessed to allowing more than 100 American citizens hide $1.2bn from the Internal Revenue Service for nearly a decade.
America's recent crackdown on tax evaders and offshore accounts discouraged Swiss banks from taking on U.S. customers.



But Wegelin, based in the Swiss town of St Gallen did not follow suit.


US Attorney Preet Bharara told the BBC (http://www.bbc.co.uk/): 'The bank wilfully and aggressively jumped in to fill a void that was left when other Swiss banks abandoned the practice due to pressure from US law enforcement.


Read more: http://www.dailymail.co.uk/news/article-2257119/Wegelin--Co-closes-admitting-helped-100-Americans-avoid-paying-1-2bn-tax.html#ixzz2H8HSQsDt

[boutons_deux]

"A major question was left hanging by the plea: has the bank turned over, or does it plan to disclose, names of American clients to US authorities? This is a key demand in a broad US investigation of tax evasion through Swiss banks.


“It is unclear whether the bank was required to turn over American client names who held secret Swiss bank accounts,” said Jeffrey Neiman, a former federal prosecutor involved in other Swiss bank investigations who is now in private law practice in Fort Lauderdale, Florida.


“What is clear is that the Justice Department is aggressively pursuing foreign banks who have helped Americans commit overseas tax evasion,” he said."

It is generally assumed that Wegelin will be used as a witness to the US prosecutors in future cases against a dozen or so other banks:


“In court, Wegelin’s managers said they knew it was wrong, but thought they would not be prosecuted because it was legal in Switzerland and common practice in Swiss banking.

http://www.bbc.co.uk/news/business-20909168


My bet is that serial felony tax evader Bishop Gecko refused to release his tax returns because he was caught in the earlier Swiss bank tax evasion and probably took advantage of the IRS amnesty to avoid jail.

[TDMVPDPOY]

Read more: http://www.dailymail.co.uk/news/article-2257119/Wegelin--Co-closes-admitting-helped-100-Americans-avoid-paying-1-2bn-tax.html#ixzz2H8HSQsDt



they wouldve made billions already, 50m fine is like only a months potential earnings anyway, dunno why they going to cease to exists...i wonder what happens to those accounts in that bank, SUSPEND/freeze the accounts?

[mavs>spurs]

i don't get how the fuck we have authorities in all these other countries. who the hell are we to dictate to swiss banks? and how is it that the DEA operates globally..i wish we'd just back up and go the hell home, stop making enemies and immorally trying to spread our imperialism and just go the fuck home. i'm not for defending rich tax evaders, but damn i get tired of our nose being all over the place and often wonder how we even have that authority.

[TDMVPDPOY]

i dunno what shit they have done that broke any tax laws, when as long u comply/exploit the loopholes in taxation law, then the govt has no right to be chasing these individuals/entities....

[boutons_deux]

Swiss Banks Accused Of Aiding U.S. Tax Evasion Will Begin Cooperating (http://thinkprogress.org/economy/2013/07/12/2293991/swiss-banks-accused-of-aiding-us-tax-evasion-will-begin-cooperating/)




http://thinkprogress.org/wp-content/uploads/2013/03/swissflagfeature-300x169.jpg (http://thinkprogress.org/wp-content/uploads/2013/03/swissflagfeature.jpg)

Swiss authorities have cleared the way for the country’s notoriously secretive banks to cooperate with U.S. tax evasion investigations (http://online.wsj.com/article/SB10001424127887324694904578599794141404184.html).

The banks still cannot provide client names under a government program that seeks to balance strict bank secrecy laws in Switzerland with U.S. interests. Instead, they may share other information on account activity that the investigators can use to track down tax cheats. Doing so will help the banks avoid criminal prosecution in the U.S. and help American efforts to claw back some of the trillions of dollars the country has lost to tax evasion since 2001.

From 2001-2010, over $3 trillion that should have gone to the U.S. treasury was lost to tax evasion (http://www.ourfiscalsecurity.org/taxes-matter/2011/4/15/tax-evasion-the-real-costs.html).

Eighty-five percent of tax evaders are individuals, according to a Demos report, and most of those individuals evade income taxes by underreporting business income.

Not all of the money is simply sitting in vaults in Geneva, but offshore bank accounts are a key component of many common tax evasion schemes.

“Swiss secrecy laws have helped to make the country the world’s biggest offshore finance centre (http://www.reuters.com/article/2013/07/03/us-swiss-usa-banks-idUSBRE9620J120130703),” according to Reuters.

To understand Switzerland’s motivations in cooperating, it helps to recall the case of the country’s oldest bank, Wegelin & Co. The Justice Department indicted the bank in February of 2012 on tax evasion charges (http://www.reuters.com/article/2012/02/03/us-usa-tax-swiss-indictment-idUSTRE81203M20120203) involving $1.2 billion in bank holdings. Eventually the bank plead guilty and was forced to close its doors after 250 years in business (http://www.reuters.com/article/2013/01/04/us-swissbank-wegelin-idUSBRE9020O020130104). Contrast that with the 2009 case of UBS (http://thinkprogress.org/economy/2009/08/20/172906/ubs-iceberg/), which eventually cooperated with DOJ and paid a $780 million fine to settle allegations it helped American clients hide $18 billion from U.S. taxes. UBS is still in business.


http://thinkprogress.org/economy/2013/07/12/2293991/swiss-banks-accused-of-aiding-us-tax-evasion-will-begin-cooperating/

I wonder if felony tax cheater Bishop Gecko has moved his funds out of Switzerland?

[Wild Cobra]

From 2001-2010, over $3 trillion that should have gone to the U.S. treasury was lost to tax evasion (http://www.ourfiscalsecurity.org/taxes-matter/2011/4/15/tax-evasion-the-real-costs.html).


Is Obama now looking for all his hard earned trillions stolen by people?

[boutons_deux]

Is Obama now looking for all his hard earned trillions stolen by people?

2001 - 2009, your Repug assholes were running the IRS, includes the years serial felony tax evader Bishop Gecko refused to divulge his tax returns

[FuzzyLumpkins]

We need to get you two to have a full out internet brawl going.

It would be epic. TB's head would probably explode.

[TeyshaBlue]

In this corner, weighing in at 12 lbs, boutons "cut and paste" deux!

And in this corner, weighing in at various weights, depending upon wildly fluctuating co2 levels and the inherent unknowingness of the solubility of methane and seawater, Wild "I'll pull something out of my ass" Cobra!


Wooot!!!!

[TeyshaBlue]

*ding - ding!*

[boutons_deux]

In this corner, weighing in at 12 lbs, boutons "cut and paste" deux!

And in this corner, weighing in at various weights, depending upon wildly fluctuating co2 levels and the inherent unknowingness of the solubility of methane and seawater, Wild "I'll pull something out of my ass" Cobra!


Wooot!!!!

GFY, dickless cowardly stalker.

[TeyshaBlue]

:cry Stop Stalking Me! :cry
:lmao:lmao:lmao

[FuzzyLumpkins]

In this corner, weighing in at 12 lbs, boutons "cut and paste" deux!

And in this corner, weighing in at various weights, depending upon wildly fluctuating co2 levels and the inherent unknowingness of the solubility of methane and seawater, Wild "I'll pull something out of my ass" Cobra!


Wooot!!!!

:lol

[Agloco]

:lol TB

Salty.