Revised Reporting Law Could Mean Big Penalties for U.S. Clients of UBS
Prosecutors are expected to issue a subpoena seeking the names of wealthy U.S. clients using the services of Swiss bank UBS AG to avoid income taxes. Ultimately the probe could result in big fines for U.S. clients who failed to report offshore trust accounts.
The subpoena would follow the indictments unsealed Tuesday against former UBS private banker Bradley Birkenfeld and Liechtenstein businessman Mario Staggl, accused of helping U.S. clients set up offshore trusts, the Wall Street Journal (sub. req.) reports.
The indictment claims the two men helped U.S. clients get around a UBS agreement in 2001 to provide U.S. tax officials with information about interest and dividends received by the bank’s clients.
Prosecutors ultimately may seek to recover hefty penalties against these clients under a revised federal reporting law, the New York Times reports. The “obscure law enacted nearly four decades ago” requires U.S. citizens to report any foreign bank or financial accounts with $10,000 or more in deposits. The maximum fine for civil violations had been $100,000—merely “small change” for clients with multimillion-dollar accounts, the Times story says.
But a 2004 revision under the USA Patriot Act raised the maximum civil fine to $100,000 or half the money in the account, whichever is greater. Criminal penalties are $500,000 or half the account cash, and also include up to 10 years in jail.
The law was originally enacted to fight the laundering of drug money; its revision was aimed at terrorism financing.
