Swiss banking giant agrees to pay up in secret tax fraud case

Swiss banking giant UBS will pay $US780 million to the US Department of Justice to settle a tax evasion case, but says it will not negotiate with US authorities about providing information on 52,000 American clients suspected of cheating tax.

The US Department of Justice filed a lawsuit against the bank demanding information on the bank’s US customers. The suit comes a day after UBS made an agreement with the US authorities to pay a $US780 million penalty for providing secret bank accounts to wealthy US citizens for the purpose of tax evasion.

“UBS sincerely regrets the compliance failures in its US cross-border business that have been identified by the various government investigations in Switzerland and the US, as well as our own internal review,” UBS chairman Peter Kurer said in a statement.

While the bank “accepts full responsibility for these improper activities,” Kurer also said “client confidentiality, to which UBS remains committed, was never designed to protect fraudulent acts.”

But the bank has not yet handed over the details of the 52,000 US-based customers, and Swiss banking regulators appear set to stonewall US authorities.

UBS says the US Internal Revenue Service summons “seeks information regarding a substantial number of undisclosed accounts maintained by US persons at UBS in Switzerland, whose information is protected from disclosure by Swiss financial privacy laws.

“UBS believes it has substantial defences to the enforcement of the ‘John Doe’ summons and intends to vigorously contest the enforcement of the summons in the civil proceeding.”

Australian tax officials are set to closely watch the $US780 million settlement, as it is unclear whether Australians are included in a list of 250 wealthy account holders to be handed over to the US.

If the client details are handed over, it will be the first time in centuries that Swiss regulation authorities will allow a bank to reveal account holder identities.

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