U.S. Justice Department indicts Swiss bank Wegelin

Thu Feb 2, 2012 9:54pm EST
 

By Lynnley Browning

(Reuters) - The United States indicted Wegelin, the oldest Swiss private bank, on charges that it enabled wealthy Americans to evade taxes on at least $1.2 billion hidden in offshore bank accounts, the U.S. Justice Department said on Thursday.

The announcement, by federal prosecutors in Manhattan, represents the first time an overseas bank has been indicted by the United States for enabling tax fraud by U.S. taxpayers.

The indictment said the U.S. government had seized more than $16 million from Wegelin's correspondent bank, the Swiss giant UBS AG, in Stamford, Connecticut, via a separate civil forfeiture complaint. Because Wegelin has no branches outside Switzerland, it used correspondent banking services, a standard industry practice, to handle money for U.S.-based clients.

UBS could not be reached for immediate comment.

The charges against Wegelin, of fraud and conspiracy, provide a rare glimpse into the world of Swiss private banking in the wake of a crackdown on UBS AG. In 2009, UBS paid $780 million and entered into a deferred prosecution agreement with the Justice Department over charges it engaged in fraud and conspiracy by enabling scores of Americans to evade taxes through its private bank. The bank later turned over the names of more than 4,500 clients, a watershed in Swiss bank secrecy, which protects the confidentiality of clients and their data.

The indictment signals a ramping up of pressure on 10 other Swiss banks under investigation by the Justice Department, including Credit Suisse, Julius Baer and Basler Kantonalbank.

Six days ago, Wegelin -- founded in 1741 -- effectively broke itself up by selling the non-U.S. portion of its business. The indictment represents the latest blow to the tradition of Swiss bank secrecy in a long-running U.S. crackdown on tax dodgers.

Switzerland is seeking a global solution for its entire banking industry, not just the 11 banks under criminal scrutiny.   Continued...

 
<p>A logo of the Swiss bank Wegelin is pictured at a building in Bern, in this January 27, 2012 file photo. REUTERS/Michael Buholzer/Files</p>