The FT reports:
UBS defended itself on Thursday against attempts by the US Internal Revenue Service to extract names of thousands of American customers holding offshore accounts, telling a federal court that matters should be resolved via talks between Bern and Washington.
The beleaguered Swiss bank was responding to a legal challenge by the IRS to reveal the names of up to 52,000 accounts as part of the US administration’s efforts to combat tax evasion.
In a 50-page submission to the federal court in Southern Florida, UBS presented itself as the victim of a broader dispute over bank secrecy between the US and Switzerland.
UBS’s court submission, backed by comments from legal and constitutional experts, is based on arguments that issues relating to information about its US offshore clients are covered by the Switzerland-US double taxation treaty.
The bank argues any attempts to access information should be conducted via the treaty, rather than through separate court action.
UBS also notes that, in the single precedent, when the IRS used similar tactics to extract customer information from Bank of America’s Hong Kong branch, this was rejected by the courts.
This is extraordinary. UBS has already agreed it ran its operations in the US illegally. These people, as I understand it, are alleged to have been clients of that illegal US operation. In that case this has nothing to do with the double tax treaty. It is about accessing records held outside the USA of an operation undertaken illegally within the USA.
I sincerely hope the sanction of removing the UBS banking licence is considered in the USA, and elsewhere. Would we tolerate such behaviour from anyone else? The ‘too big to fail’ concept cannot be allowed as an excuse for preventing enquiry into alleged criminal activity, but that seems to be what is happening. That’s not good enough.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Good blog, Richard, though I would take you up on the ‘too big to fail’ issue. The megalomaniac drive by bankers to create operational structures that span the globe happened in an environment in which prudent management was swept aside. We have been suffering the consequences since 2007. UBS and others had become too large to effectively manage the huge diversity of risks on their loan books. They were, in other words, too big to NOT fail, all the more so given the rotten culture that drove the expansion of their private banking activity in the US. All the more reason for removing their banking licence in that country.
UBS should be in the Guiness Book of Records as the Earth’s largest hornets’ nest. The extent of its corrupt practices is mind-boggling.