Swiss banks have reacted cautiously when speaker after the filing of criminal charges in the US against Wegelin & Co, Switzerland's oldest bank.
Swiss banks have reacted cautiously when speaker after the filing of criminal charges in the US against Wegelin & Co, Switzerland’s oldest bank.
According to indictment documents, US prosecutors alleged Wegelin helped rich Americans hide more than $1.2bn in secret accounts abroad.
Swiss banks are also facing pressure from tax authorities in the UK and Germany, but the allegations against Wegelin and primarily named senior employees increase the pressure from Washington significantly.
America’s indictment of Wegelin follows moves against UBS and Credit Suisse over dealings with US taxpayers, who are obliged to report any significant offshore monies and pay tax on worldwide income.
UBS had agreed with US authorities to hand over names of more than 4,000 US account holders, and paid a fine, to avoid criminal charges.
Banks such as UBS, and Julius Baer group, have emphasised they have stopped taking US clients that could eventually cause such problems.
Speaking at the recent annual results of Julius Baer Group, that bank’s chief executive Boris Collardi said the US moves were a challenge for Swiss banks – but that Julius Baer Group would co-operate with requests up to the limits required under Swiss law.
In US authorities’ indictment against Wegelin, they stated that between 2008 and 2009 Wegelin began to-open new undeclared accounts for US taxpayers fleeing UBS, while a managing partner at Wegelin told various client advisors in Zurich “not to communicate with their US taxpayer-clients by telephone or e-mail, but rather to cause their US taxpayer-clients to travel from the United States to Switzerland to conduct business relating to their undeclared accounts.”
Many of the allegations related to Zurich-based client advisors Michael Berlinka, Urs Frei and Roger Keller, and further unnamed colleagues.
Among various other allegations, the US authorities said Wegelin’s advisors to US clients used personal email accounts to communicate, so as to avoid detection; they rarely sent documents with client names on them via official email; and they often used couriers to deliver documents to some US clients.
The US prosecutors also allege Wegelin bankers told US clients that their undeclared accounts wouldn’t be disclosed to US authorities because of the bank’s long tradition of secrecy.
The indictment added that Beda Singenberger, an independent asset manager for various US taxpayers with undeclared accounts at Wegelin, helped “hide [undeclared] accounts, and the income generated therein, by, among other things, selling sham corporations and foundations to US taxpayers as vehicles through which the US. taxpayers could hold their undeclared accounts.”
More than 100 US taxpayers conspired with Wegelin employees and Singenberger to keep accounts concealed, the indictment said.
It also alleged Wegelin employees had told team leaders at the bank that Wegelin would not be exposed to the “risk of prosecution that UBS faced in the United States because Wegelin was smaller than UBS, and Wegelin could charge high fees to its new US taxpayer-clients because the clients were afraid of criminal prosecution in the United States.”
It alleges that the bank, Berlinka, Frei and Keller “opened and serviced undeclared accounts for US taxpayers – sometimes in the name of sham corporations and foundations established under the laws of Panama, Hong Kong, and Liechtenstein”.
Wegelin has said to newswires it will fulfill its responsibilities and stand by the bank’s obligations in the matter of the indictment.