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UBS closing US clients' offshore accounts

Swiss wealth manager UBS AG is closing all the offshore accounts of its US clients, the bank said on Friday, as it comes under pressure from US tax authorities.

The Swiss bank decided in July last year to stop offering offshore accounts to US citizens after it was targeted by a US tax investigation which challenges Switzerland's famous banking secrecy laws.

US prosecutors have alleged UBS helped clients hide $18 billion of untaxed American money in undeclared accounts. This amounts to around $300 million of annual unpaid taxes, the newspaper said.

UBS spokesman Serge Steiner said the decision to close offshore accounts for US domiciled clients was taken in November 2007. The bank started last year to close cash accounts of US clients holding less than 50,000 Swiss francs ($45,660), he added.

“This is an ongoing process. It started last year and accelerated since last summer,” Steiner said, confirming a New York Times report.

As part of the investigation, US authorities indicted UBS's wealth management chief last year.

UBS, which US authorities say helped wealthy Americans hide cash in offshore bank accounts, will shut about 19,000 offshore accounts, the paper said, quoting unnamed US clients.

UBS would not comment on the number of accounts to be closed and Steiner said it was not possible to say how long it would take for all the accounts to be closed.

“We cannot give any time framework for the whole exercise,” he said.

Clients will have the option of transferring their assets to one of three US-regulated units - on-shore wealth management units in the US, Switzerland and Hong Kong - or other banks, Steiner said.

They may also choose to receive checks, creating paper trails for US federal prosecutors who are checking whether UBS clients used such accounts to evade taxes.

“You can either transfer the money to new banks, or deposit somewhere and get busted,” a UBS client was quoted as saying in the newspaper report.

All banks in Switzerland are bound to strict bank secrecy laws but a Swiss banking source said local private banks would be reluctant to take on any of UBS' American offshore clients.

The transfer of more than $10,000 to a new bank is something that clients are expected to report to the Treasury Department, the paper said.

In a separate article, the Wall Street Journal said on Friday many US clients of UBS had started to voluntarily turn themselves in to the US Internal Revenue Service. The clients have so far avoided serious punishment, the paper said. (Reuters)