US legal case against world’s largest bank expected to be dropped after Swiss hand over details of account holders

News - Banking

Written by Ray Clancy

Tuesday, 31 August 2010 11:11

The US Internal Revenue Service is to drop a closely watched civil lawsuit against the Swiss bank giant UBS after the Swiss government said it was on course to hand over details on thousands of American clients suspected of using their accounts to evade taxes.

So far the IRS has received details on 2,000 clients and it said it expects to receive information on the remaining 2,450 soon despite the August deadline passing.

A spokesman said the IRS is confident that the rest of the details, agreed in a deal a year ago will be forthcoming and that the row between UBS, the world’s largest private bank, and Switzerland over offshore finance services will come to an end.

‘Based on information received to date and assurances by the Swiss government, we anticipate being in a position to withdraw the summons this fall,’ the spokesman said in a statement.

The agency, backed by the Justice Department, sued UBS last year, one day after the bank reached a $780 million deferred prosecution agreement with US authorities over its private banking services.

UBS is disclosing details of US clients who had unreported accounts of at least 1 million Swiss francs, about $977,000. Under the agreement UBS will also details of Americans who held sham accounts. In both cases the accounts in question cover 2001 to 2008.

‘UBS can close the chapter on the suspected tax evaders now. The bank has overcome that burden and can focus on its future business,’ said Franco Taisch, a professor of business law at the University of Lucerne.

Some of the data has yet to be delivered because clients can still appeal, said Mario Tuor, a spokesman for the State Secretariat for International Financial Matters. ‘Judging by what has happened so far, I don’t expect many clients to appeal. That means most of the 4,450 accounts will be delivered,’ he explained.

UBS expects the implementation of the agreement to be completed in ‘the coming weeks’, the Zurich based bank confirmed. ‘UBS remains confident that a final resolution of the US case will be achieved in October,’ it said in a statement.

A Swiss court almost delayed the deal in January, ruling that it wasn’t enforceable under current Swiss legal provisions. But Swiss lawmakers rescued the deal in June.

Since February 2009, the US Justice Department has filed criminal tax charges against 17 UBS clients in the US, two UBS bankers and three others accused of aiding tax evasion.