ZURICH UBS, the world's biggest bank to the rich, said Tuesday it had given details to the United States of U.S. onshore bank accounts as part of a tax probe that is testing Swiss bank secrecy and UBS's reputation.
No data has been transferred from offshore or undeclared bank accounts located in Switzerland that are key to the country's long-standing tradition of bank confidentiality, UBS and the Swiss Finance Ministry told Reuters.
The probe focuses on whether Swiss bank UBS illegally helped wealthy Americans to dodge taxes through its offering of offshore services from 2000 to 2007. The bank was singled out by U.S. President-elect Barack Obama as one of those which helped "tax cheats."
"U.S. authorities have requested data from UBS on U.S. onshore clients," a UBS spokesman said. "UBS must comply with that request for information located in the United States."
The spokesman said the request was made in the third quarter of this year. He would not say how many U.S. onshore or declared bank accounts were involved.
The Swiss are still assessing a request by U.S. authorities for information about offshore bank accounts held by U.S. clients of UBS in Switzerland.
Switzerland does not consider tax evasion a crime and the Swiss Finance Ministry is the only authority in the country that could authorize the transfer of Swiss-based client data to the United States.
"Swiss authorities have not released any such data," Swiss Finance Ministry spokesman Roland Meier told Reuters. "There is an administrative assistance procedure ongoing."
The U.S. tax probe against UBS could result in indictments of senior and mid-level executives at the Swiss bank, the New York Times reported Tuesday. UBS declined to comment.
UBS, whose credit woes already led to the departure of its former chairman and other top executives earlier this year, decided in July to stop offering offshore Swiss bank accounts to U.S. citizens.
THREAT TO SWISS BANK SECRECY?
Switzerland is also facing increasing pressure from neighboring Germany and other EU countries to give up on its tradition of closely guarding details of its bank clients.
Swiss bank-client confidentiality goes back centuries but was codified in the early 1930s as pressure mounted on the Alpine country to exchange client details, partly from Nazi Germany pursuing assets of fleeing Jews. But it subsequently became closely associated with tax evasion.
Switzerland is the world's biggest offshore center and holds $2 trillion or about 27 percent of estimated global undeclared assets, according to the Boston Consulting Group.
Under an agreement between Berne and Washington, the U.S. can ask Switzerland for help in obtaining information on Swiss bank accounts in the case of tax fraud, but not tax evasion.
Once a request is made to the Swiss authorities, a domestic investigation takes place and data handed over only if and when Swiss tax authorities have evidence fraud did occur.
A Swiss bank account holder has the right to appeal against such a decision.
The U.S. Internal Revenue Service (IRS) has asked Swiss tax authorities for assistance in obtaining information relating to U.S. clients of UBS, the bank said in its third-quarter report.
The IRS has also issued a civil summons and the District Attorney for the County of New York has issued a request for information located in the United States concerning the Swiss bank's cross-border business, to which UBS is complying.
The IRS and the U.S. Justice Department were not immediately available to comment.
(Additonal reporting by Ajay Kamalakaran; Editing by David Cowell and Elaine Hardcastle)