ZURICH Feb 24 U.S. prosecutors are widening their probe of how Swiss banks helped wealthy Americans avoid taxes to look at insurers as well, the Wall Street Journal reported on Monday, citing unnamed sources.
Insurers in Switzerland have been preparing for months for U.S. officials to investigate products known as insurance wrappers - life insurance policies into which the very wealthy place stocks, private equity holdings and other bankable assets, allowing them to lower their tax rate.
Zurich-based Swiss Life in December returned funds to hundreds of American clients who had invested in wrappers linked to bank accounts at Bank Frey, according to the WSJ report.
Frey, a private bank, is one of 14 Swiss firms under formal U.S. investigation for its dealings with U.S. clients and untaxed assets. It said late last year it will close because the probe's costs eclipse the bank's financial strength.
Swiss Life wasn't immediately available for comment on Monday.
Returning client funds would represent a stepping up of measures from last year, when insurers were trying to ensure that American clients who bought the insurance products can show that they have paid taxes due to the United States, industry insiders had told Reuters.
Besides Bank Frey, Credit Suisse, Julius Baer and unlisted rivals such as Pictet are caught in the crosshairs of the U.S. probe.
Those investigations have taken a backseat to a government-brokered scheme to extract Swiss banks from prosecution for aiding tax evasion through hidden offshore accounts.
The U.S. Justice Department said recently it had received 106 requests from Swiss entities to participate in a settlement programme aimed at resolving past tax crimes for Swiss banks, but that not all the entities might be banks and would thus not be eligible.
The comments sparked renewed speculation that insurers may have tried to come forward to U.S. officials on their dealings with U.S. clients. (Reporting By Katharina Bart; Editing by Michael Shields)