Financial Regulatory Forum

Retraction of global correspondent banking networks challenges financial-crime risk management

By Kim R. Manchester, Contributing author for Compliance Complete

NEW YORK, July 2 (Thomson Reuters Accelus) - Global correspondent banks have faced numerous challenges since the onset of the financial crisis in 2008, including heavy scrutiny by regulators on money-laundering and terrorism-financing defenses, shrinking transaction volumes, slashed profit margins and risk parameters that defy rational measurement. A Financial Times report on how global correspondent banks are clawing back the reach of their correspondent banking network operations and trimming respondent banks from their client lists comes as no surprise to the casual observer of international banking.

For the financial intelligence community, this retraction by global correspondent banks will blur their insight into international money laundering and terrorism financing networks and hamper efforts to disrupt organised crime and terrorist groups. For financial institutions, the retraction of networks will create new challenges in financial crime risk management, with painful and expensive consequences if compliance programs are not tailored to meet money laundering and terrorist financing threats within correspondent banking. (more…)

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.

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.

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.

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.

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.

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

U.S. Internal Revenue Service (IRS) Commissioner Douglas Shulman speaks during an interview with Reuters at his office in Washington October 8, 2009. REUTERS/Hyungwon Kang 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.

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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.

New Jersey man pleads guilty for hiding UBS account

LIECHTENSTEIN-TAX/   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. (more…)

Banks see damage from tighter Swiss regulation

UBS/TAX   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. (more…)

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