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from Financial Regulatory Forum:

SPECIAL REPORT – How the U.S. cracked open secret vaults at UBS

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By Lisa Jucca

ZURICH, April 9 (Reuters)- After the collapse of Lehman Brothers in September 2008, Switzerland's largest bank was teetering. UBS, which was more than three times bigger than Lehman in terms of assets, had to write down some $50 billion during that tumultuous period.

Investors the world over breathed a sigh of relief on Oct. 16 when the Swiss government rescued UBS. But unbeknownst to them at the time, the bank faced a potentially devastating crisis on a very different front.

One day after the bailout, top executives from UBS and Swiss regulators were summoned to a closed-door meeting in New York by U.S. officials who were conducting a wide-ranging tax fraud investigation that centered on the bank.

The UBS delegation, led by newly-appointed Group General Counsel Markus Diethelm, arrived armed with the results of an internal report highlighting instances of tax fraud within the bank, insiders told Reuters. The plan was simple: admit guilt, settle the case quickly and move on.

But Kevin Downing, the U.S. Department of Justice Tax Division Attorney who had been investigating UBS since the middle of 2008, chose that meeting to drop a bombshell: he wanted the bank to disclose names of U.S. tax evaders as a condition for a settlement.

from Financial Regulatory Forum:

IRS to take “macro” approach on U.S. foreign bank law

By Kim Dixon

WASHINGTON, March 2 (Reuters) - Foreign banks will likely not need to identify holders of millions of U.S. accounts individually, a top U.S. tax official said, in the run-up to a new reporting law aimed at catching wealthy tax dodgers.

The law, expected to be passed by the U.S. Congress in coming months, would slap a 30 percent withholding tax on U.S. income of foreign financial institutions if they fail to report U.S. account holders, among other provisions.

It comes amid sharpened focus on wealthy Americans stashing funds abroad, in particular after a landmark settlement with the Swiss bank UBS AG  last year in which the bank admitted it actively helped Americans dodge billions in taxes.

"I don't know how many millions it would be -- but can you imagine trying to go account by account?" Steven Musher, associate chief counsel for international affairs at the Internal Revenue Service, said on the sidelines of a foreign bankers meeting in Washington.

Musher told the bankers earlier that the IRS, charged with implementing the law, would be looking at banks' "macro processes" rather than expecting them to meticulously identify their millions of accounts.

Foreign banks have been lobbying to soften the law and complained about the cost of compliance.

from Financial Regulatory Forum:

German state ready to buy stolen bank data-source

BERLIN, Feb 4 (Reuters) - Germany's most populous state has made final checks on stolen bank data belonging to potential tax cheats and is ready to buy the information, a person familiar with the matter told Reuters on Thursday.

"We have finished the examination," said a source from the financial authorities of the state of North Rhine-Westphalia. "The groundwork has thus been laid to acquire the data."

German Finance Minister Wolfgang Schaeuble sent shivers through the large Swiss private banking industry this week when he said Berlin was prepared to pay for stolen data belonging to potential tax dodgers at a Swiss bank.

The data could lead to the state raking in greater sums of money in tax evasion than previously thought, the Sueddeutsche Zeitung reported on Thursday, citing authorities.

German media had reported that the data on up to 1,500 possible tax evaders could lead to 100 million euros ($139 million) for state coffers.

Germany had already paid for stolen data in 2008 when it purchased information stolen from Liechtenstein's top bank LGT, forcing the tiny principality to give up bank secrecy rules.

In an interview with Reuters earlier this week, Schaeuble said it was the responsibility of individual German states to decide what to do with such data.

from Financial Regulatory Forum:

European states keep Swiss bank secrecy under siege

By Jason Rhodes and Ben Berkowitz

BERNE/AMSTERDAM, Feb 3 (Reuters) - European states lined up behind German Chancellor Angela Merkel to expose tax cheats in a combined assault on the Swiss banking secrecy laws that help protect them.

German Finance Minister Wolfgang Schaeuble sent shivers through the large Swiss private banking industry this week when he said Berlin was prepared to pay for stolen data belonging to potential tax cheats at a Swiss bank, raising the bar in the fight against tax evasion.

Now, the Dutch, Belgian and Austrian governments have also flagged interest in obtaining a copy of a compact disc with tax-sensitive data that Berlin may soon buy from an informant.

Swiss Finance Minister Hans-Rudolf Merz said on Wednesday the Swiss would not help Germany or others hunt tax cheats on the basis of stolen Swiss bank data, but tried to defuse the escalating row by saying Berne would not retaliate.

"It is obvious that such a theft is a criminal act," Merz said. "Switzerland should therefore not offer administrative (tax) assistance in such cases either now or in future."

But he added that Switzerland would continue to engage in talks aimed at signing a new treaty with Germany.

from Financial Regulatory Forum:

Order for UBS to release client data ruled unlawful by Swiss court

By Jason Rhodes

ZURICH, Jan 8 (Reuters) - The Swiss financial regulator broke bank secrecy law last year when it ordered UBS to hand over the files of nearly 300 clients to U.S. authorities, a Swiss court said on Friday.

Regulator FINMA decided on Feb. 18 to allow UBS to hand over some client data to U.S. tax officials, weakening the country's strict bank secrecy rules in an effort to end a damaging probe into its biggest bank, which prompted clients to pull billions of francs from accounts and leave in droves.

"Even though FINMA was in a difficult position because of the threat of charges against UBS AG, it should not have ordered unilaterally the passing on of data outside of a proper process of a request for official assistance," Switzerland's Federal Administrative Court said.

Zuercher Kantonalbank analyst Andreas Venditti said the ruling provided more clarity on FINMA's role in matters of bank secrecy, although the judgement could still be challenged.

"The damage has already been done for UBS and maybe for the whole Swiss banking industry. But if this ruling means FINMA cannot act alone in future, it certainly helps," Venditti said.

UBS shares extended earlier gains after the ruling was published, ending the session up 3.8 percent at 17.21 Swiss francs. The DJ Stoxx European banking sector index was up 1.24 percent.

from Financial Regulatory Forum:

U.S. offshore tax amnesty yields big response – IRS

By Kim Dixon WASHINGTON, Nov 17 (Reuters) - Some 14,700 rich Americans worried about a U.S. government crackdown on offshore tax cheats came forward to participate in a tax amnesty program, the top U.S. tax official said on Tuesday.

Participation in the Internal Revenue Service's amnesty program was "unprecedented" and the final number was nearly double the agency's estimate in October, U.S. Internal Revenue Service Commissioner Douglas Shulman told reporters in a telephone briefing.

The IRS amnesty program, which ended in October, offered reduced penalties for wealthy Americans who voluntarily disclosed previously undeclared foreign bank accounts and assets. "We were flooded with people coming in the final days of the program," Shulman said.

"The IRS has never got anything like that in response to prior initiatives," said Barbara Kaplan, a lawyer for high net- worth clients in New York. "It's a little higher than I anticipated based on the pace of my own practice and the panic that was out there."

While agency officials were still analyzing the amount of offshore assets and bank accounts disclosed, Shulman said "we are talking about billions of dollars coming into the U.S. treasury" from the amnesty program.

Of the 14,700 newly disclosed accounts, Shulman said many involved bank accounts in Switzerland and Europe, but assets were also hidden in more than 70 countries.

from Financial Regulatory Forum:

Swiss bank J.Baer says tax clampdowns slow money flows

By Jason Rhodes ZURICH, Nov 10 (Reuters) - Swiss private bank Julius Baer Group AG said money from wealthy clients had been flowing into the group at a slower pace since mid-year due to international tax clampdowns.

Baer, which split its core private bank and asset management operations into two separately listed companies last month, also said on Tuesday it was seeking more acquisitions following its purchase of ING's Swiss private banking assets.

"We are still open to acquisitions. In principle, the bigger the better," said spokesman Jan Bielinski, adding Baer was looking in Asia, Switzerland and the rest of Europe.

Baer has an estimated war chest of $500 million but Bielinski said the bank could tap the market for more.

Switzerland has faced a barrage of attacks over its tax- haven status, prompting the country to relax its cherished bank secrecy to comply with international rules.

Germany, France, Italy and the United States have all launched action over their citizens stashing savings in secretive Swiss accounts.

The regulatory environment in some European countries was leading to some clients relocating assets, Julius Baer, Switzerland's third-biggest bank, said without providing figures.

from Financial Regulatory Forum:

New Jersey man pleads guilty for hiding UBS account

   WASHINGTON, Sept 25 (Reuters) - A New Jersey man pleaded guilty on Friday for failing to report about $6.1 million he had held in a UBS AG <UBSN.VX><UBS.N> Swiss bank account, the latest plea in the U.S. crackdown on tax fraud.    Juergen Homann agreed to plead guilty to failing to report his UBS account on his U.S. income tax return as well as the income he received from the account, according to the Justice Department.    Homann worked with a Swiss lawyer to set up the account that held some $6.1 million from 2001 to 2008, the agency said. The lawyer, Matthias Rickenbach, is under federal indictment for helping Americans evade U.S. taxes.    Homann's guilty plea is the latest in a series of prosecutions as the Obama administration cracks down on Americans, who have hidden funds overseas in a bid to avoid U.S. taxes. An amnesty program is due to expire Oct. 15.    "Those who think they can 'stay below the radar' face a real risk of prosecution and jail if convicted, and they will still owe the taxes due, together with interest and civil penalties," said John DiCicco, the acting assistant attorney general for the Justice Department's tax division.    U.S. and Swiss officials signed a pact last month in which the details of 4,450 accounts of Americans from banking giant UBS would be turned over to U.S. authorities. Switzerland also committed to help uncover Americans' hidden accounts at other Swiss banks.  (Reporting by Jeremy Pelofsky, editing by Lisa Von Ahn, Leslie Gevirtz) ((jeremy.pelofsky@thomsonreuters.com; +1 202 898 8396; jeremy.pelofsky.reuters.com@reuters.net)) Keywords: UBS USA/NEWJERSEY     For Related News, Double Click on one of these codes:[E] [U] [NAW] [UKI] [EMK] [D] [T] [NAT] [M] [PSC] [RNP] [DNP] [PTD] [WASH] [REGS] [LAW] [CRIM] [FIN] [BNK] [GEN] [PIL] [POL] [BACT] [CH] [CEEU] [EUROPE] [WEU] [LEN] [RTRS] [UBSN.VX] [UBS.N]  For Relevant Price Information, Double Click on one of these codes:<UBSN.VX> <UBS.N>  Friday, 25 September 2009 18:01:30RTRS [nN25510639] {EN}ENDS

from Financial Regulatory Forum:

Banks see damage from tighter Swiss regulation

   By Emma Thomasson    ZURICH, Sept 25 (Reuters) - Swiss bank UBS <UBSN.VX> said new capital rules could put the country's financial industry at an international disadvantage as it struggles to rebrand itself after bank secrecy was relaxed.    "It is dangerous for the international competitiveness of the Swiss financial industry if the regulators in Switzerland turn the screws tighter and quicker than happens in other financial centres," chief executive Oswald Gruebel said.    In a speech on Friday at a KOF Swiss Economic Institute event, Gruebel said Swiss banks would have to work harder to attract customers since Switzerland relaxed strict bank secrecy that helped make it the world's biggest offshore centre.    "If we want to differentiate ourselves from other financial centres in future we will have to concentrate more on managing the assets that we have than in the past," he said.    Gruebel welcomed news Switzerland would be taken off an international list of tax havens after signing the required 12th tax deal on Thursday ahead of a Group of 20 summit expected to discuss the fight against tax evasion. [ID:nLO95379]    He said Swiss banks would seek to expand more in Asia where the tax question was less important, adding the offshore business would only be interesting in future in emerging markets as Europe and the United States clamp down on tax dodgers.    UBS settled a tax probe with the U.S. government last month, agreeing to turn over the names of 4,450 American clients.    The bank is struggling to recover from the credit crisis and the U.S. tax probe. Gruebel said while it was now stable and working towards profitability, that would take time.    He rejected suggestions from Swiss regulators that UBS and its other large rival, Credit Suisse <CSGN.VX>, should be slimmed down to prevent future systemic risks to the economy, saying that could cut the size of the Swiss financial sector in half.        BETTER FUNDED REGULATOR?    Gruebel accepted the need for strong future regulation and said UBS would be prepared to pay more to fund the FINMA financial regulator, which he joked currently had an annual budget just a third that of the Zurich Opera House.    Gruebel's comments came as Swiss banks expressed concern new Swiss regulations on bonuses to limit excessive risk-taking could be a competitive disadvantage.    On Friday, FINMA said it would finalise the new rules in early November, which will come into force on Jan. 1, although a year's transition period is planned. [ID:nL3424404]    The Swiss Bankers Association said the proposals went too far in interfering in company policy and would cause big administrative costs, particularly for smaller banks.    "We expect in particular that international developments and the rules of foreign financial centres will be closely watched and that the Swiss rules will be adjusted if necessary," it said in its written response to FINMA.    Reforming pay schemes for bankers, blamed for fostering a high-risk corporate culture that led to heavy losses and taxpayer-funded bailouts, is a key topic at the Group of 20 summit that started on Thursday in Pittsburgh. [ID:nN25480100]    Credit Suisse said the proposals could create serious competitive disadvantages and urged FINMA to coordinate with other international regulators before they come into force.    "The proposal go too far in many areas and can therefore lead to competitive distortions," the bank said.    Gruebel did not make any comments on the bonus rules. UBS <UBSN.VX> <UBS.N> is supposed to comply with the rules this year already after it was forced to accept a government bailout.    UBS said last year it was axing bonuses for top executives and linking future payouts to the bank's results.  But it has faced criticism for recent big hikes in pay for investment bankers to retain key staff after the bonus cut. ((For FINMA statement: http://www.finma.ch/e/aktuell/pages/aktuell-sn-rs-verguetungssysteme-20090925.aspx)) ((Reuters messaging: emma.thomasson1.reuters.com@reuters.net; +41 58 306 7311))  Keywords: SWISS/BANKS     For Related News, Double Click on one of these codes:[D] [T] [E] [PSC] [RNP] [PTD] [PCO] [EMK] [CH] [WEU] [EUROPE] [BNK] [DFIN] [POL] [REGS] [CEEU] [FINS] [GEN] [PIL] [BACT] [G20] [LEN] [RTRS] [UBSN.VX] [CSGN.VX] [UBS.N]  For Relevant Price Information, Double Click on one of these codes:<UBSN.VX> <CSGN.VX> <UBS.N>  Friday, 25 September 2009 17:26:39RTRS [nLP584243] {EN}ENDS

from Financial Regulatory Forum:

Swiss say to be removed from tax haven list

By Lisa Jucca and Sven Egenter ZURICH, Sept 24 (Reuters) - Switzerland expects to be taken off the OECD's list of tax havens after the country signed the required 12th tax deal on Thursday.

"With today's signing of the new double taxation agreement with Qatar by President Hans-Rudolf Merz and the Prime Minister of Qatar, Switzerland has been swift to implement the OECD criteria," the finance ministry said in a statement. "Further agreements will follow. Consequently, Switzerland will be removed from the "grey list' of the OECD Secretariat," it said.

G20 leaders agreed in April to name and shame offshore centres that did not cooperate on tax evasion and threatened them with sanctions.

That caused political embarrassment for Switzerland and other international offshore centres, which swiftly agreed to relax their bank secrecy rules.

The pressure was particularly high on Switzerland, the biggest offshore centre which manages one third of the world's wealth, at a time when banking giant UBS was facing a tax fraud probe in the United States.

Fear of sanctions pushed Berne to agree for the first time it would share with foreign tax authorities certain bank data on tax evasion matter, a move the local press described at the time as a capitulation.