Banking giant UBS has agreed to pay $780 million and turn over once-secret Swiss banking records to settle allegations that it conspired to defraud the U.S. government of taxes owed by big clients, federal officials said Wednesday.
As part of the deal struck in federal court in Fort Lauderdale, Fla., UBS has made the unprecedented step of agreeing to immediately turn over to the U.S. government account information for U.S. customers of the Zurich, Switzerland-based bank’s cross-border business.
In doing so, federal authorities have struck a big crack in Switzerland’s vaunted bank secrecy laws.
UBS will pay $780 million in fines, penalties, interest and restitution for conspiring to create sham accounts to hide the assets of U.S. clients from the U.S. government.
“We accept full responsibility for these improper activities,” UBS Chairman Peter Kurer said in a statement.
According to U.S. officials, when an acquisition in 2000 of a U.S. company brought UBS a host of new American clients, the bank set about to evade new reporting requirements for those clients. To do so, UBS executives helped U.S. taxpayers open new accounts in the names of sham entities.
Prosecutors contend that UBS executives used encrypted software and other counter-surveillance techniques to prevent anyone from detecting that they were actively marketing such Swiss bank secrecy -- and tax evasion -- to American taxpayers.
The clients, in turn, filed false tax returns that omitted the income they earned in their Swiss accounts, according to the court papers.
Federal officials said they had pulled aside a veil of secrecy that hid a corrupt international banking practice.
“This was not a mere compliance oversight, but rather a knowing crime motivated by greed and disrespect for the law,” said Alexander Acosta, U.S. attorney for southern Florida.