Switzerland says goodbye to light touch regulation
LONDON, May 3 (Thomson Reuters Accelus) - These days even the Swiss are fed up with their bankers. The financial crisis has riled Swiss citizens to the point that the Alpine country’s reputation for light-touch financial regulation will soon be a thing of the past. In a direct democracy such as Switzerland, where every citizen can vote on laws and even propose them, the people have spoken. What they have said is: we want more rules and regulation for bankers and asset managers.
“In the past people were against regulations which seemed too restrictive, but this is changing. The public mood is still critical vis-à-vis the banks and the culture of big bonuses for board of directors and management. Now we may see overregulation also because of the immediate political pressure facing a direct democracy,” Marc Raggenbass, head of the regulatory, compliance and legal practice at Deloitte in Zurich, told Thomson Reuters. (more…)
The compliance lessons, so far, arising from the UBS rogue trader
LONDON, Sept. 23 (Thomson Reuters Accelus) – UBS’s loss of $2.3 billion has hit the headlines worldwide, and while full details of what went wrong are unlikely to be public in the near future there are already compliance lessons for other firms. UK and Swiss regulators have launched an investigation into:
- the details of the unauthorised trading activity;
- the control failures which permitted the activity to remain undetected; and
- the overall strength of UBS’ controls to prevent unauthorised or fraudulent trading activity in its investment bank.
Although the investigation is ongoing, and the regulators have expressly stated that they do not, as yet, have an expected timescale, there are a number of lessons or steps for other firms to consider. (more…)
Rogue traders will always pose risk to compliance controls, says industry
By Martin Coyle and Alex Robson
LONDON/NEW YORK, Sept. 16 (Thomson Reuters Accelus) – The $2 billion rogue trading incident at UBS demonstrates that determined individuals will always be able to circumvent internal systems and controls despite the recent regulatory scrutiny on this area, industry officials said. The case also highlighted the need for banks to think about their reward structures, they added.
UBS yesterday confirmed that 31-year-old London-based trader Kweku Adoboli had lost the bank around $2 billion in unauthorised deals. The director of exchange-traded funds (ETFs) and “Delta 1″ was arrested on suspicion of fraud at his desk by City of London Police at 3:30am. (more…)
ANALYSIS-Asia next in line of fire for U.S. tax police
By Jason Rhodes, Kevin Lim and Joe Rauch
ZURICH/SINGAPORE/CHARLOTTE, July 7 (Reuters) – After forcing Switzerland’s top bank UBS to its knees for helping U.S. residents dodge taxes, U.S. authorities are moving on other banks and countries used to hide clients’ cash.
Washington inflicted a tough lesson last year on Switzerland by forcing the world’s biggest offshore banking centre to lift its treasured bank secrecy and slapping a $780-million penalty on UBS.
The Department of Justice is now going after other offshore centres like Singapore, which have attracted undeclared money that left Switzerland, and has opened a criminal inquiry into Asian clients of Britain’s HSBC Holdings Plc, Europe’s No. 1 bank.
Banks in Singapore and Hong Kong hold estimated offshore wealth worth $700 billion against Switzerland’s $2 trillion, according to the 2010 Boston Consulting Group Wealth Report.
“There are going to be more such cases,” a U.S. Internal Revenue Service source told Reuters. “There’s a lot of talk about money being moved from Switzerland into Asia.”
Swiss lawmakers last month backed a key tax treaty enabling UBS client tax cheats’ data to be handed over to the IRS, ending months of uncertainty that had threatened the recovery of the world’s second-largest wealth manager.
Seems to point out the obvious absurdity of our tax system that an agency of our government has to bully foreign governments to force private enterprises within THEIR borders and following the laws of their nation to accede to US law.
Seems to be way past time to junk the entire income tax system and implement the “Fair Tax”.
Seven insider dealing suspects head for UK court
LONDON, April 14 (Reuters) – Seven men charged with running an insider trading ring with information gleaned from the London printers of Swiss bank UBS AG <UBSN.VX><UBS.N> and UK brokerage Cazenove <JPM.N> will appear in a British court on Wednesday. (more…)
SPECIAL REPORT – How the U.S. cracked open secret vaults at UBS
* To read this story in PDF format, please click here:
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.
Former UBS chairman willing to give evidence-report
ZURICH, March 9 (Reuters) – Former UBS <UBS.N><UBSN.VX> chairman Marcel Ospel is willing to give evidence to a parliamentary committee into the Swiss government’s bailout of the bank during the financial crisis, daily Blick reported on Tuesday. (more…)
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.
Swiss minister says US insists on UBS tax deal – paper
ZURICH, Feb 11 (Reuters) – The Swiss government will probably have to turn to parliament to resolve a legal impasse threatening a deal struck with the United States to hand over data from UBS AG clients, a minister was quoted as saying.
The Swiss government had raised the option of parliament retroactively approving the deal, involving UBS clients suspected of dodging taxes, after a Swiss court ruled in favour of a UBS client seeking to prevent her account data from being given to the U.S. tax agency.
But the government’s preferred solution has so far been to negotiate a way out, hoping the United States would drop the issue if more than 10,000 UBS clients had turned themselves in voluntarily.
“I assume today that parliament has to get involved,” Justice Minister Eveline Widmer-Schlumpf told Swiss daily Blick in an interview published on Thursday.
“The United States insist that we stick to the fundamentals of the agreement. This means they want the some 4,500 sets of client data, which refer to cases of severe tax evasion and tax fraud,” she said.
Only some of a total 14,000 clients who have turned themselves in voluntarily to U.S. authorities are UBS clients, Widmer-Schlumpf said when asked if not enough UBS clients have turned themselves in, without giving a detailed number.
A spokesman for the justice ministry said talks with U.S. authorities were continuing, also declining to provide further details. (Reporting by Sven Egenter) ((sven-markus.egenter@thomsonreuters.com; +41.58.306.7351; Reuters Messaging: sven-markus.egenter.reuters.com@reuters.net))
ANALYSIS-Pressure mounts on Swiss private banks
By Lisa Jucca and Rupert Pretterklieber
ZURICH, Feb 2 (Reuters) – Swiss private bankers say attacks on the country’s treasured bank secrecy law turned 2009 into an “annus horribilis.”
A fresh German offensive against tax cheats does not make 2010 look any better for the key guardians of Switzerland’s multi-trillion-dollar wealth management industry.
Despite a settlement in the United States aimed at ending a tax probe against Swiss bank giant UBS and Switzerland’s pledges to help foreign authorities hunt down tax dodgers, the pressure on already weakened Swiss bank client confidentiality refuses to subside.
Germany’s announcement on Monday that it was prepared to pay for data on clients of a Swiss bank touted by a whisteblower has sent shivers across Swiss banking.
“This is a case that affects the whole of the Swiss financial market place because confidentiality and privacy is one of the pillars of the Swiss private banking model,” said Rainer Skierka, senior analyst at private bank Sarasin.
“This is shattered in a way and it is certainly not helping (Switzerland). They have to do everything to get this problem solved…and not let those who stole the data get away.”
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