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UBS Whistleblower Assists in Investigation of Swiss Bank

Posted in UBS / HSBC on June 12, 2015 | Share

The effort to fight against tax evasion is a global one. Not only have countries joined together to require the reporting of offshore accounts but taxing authorities throughout the world are also conducting their own independent investigations against banks that facilitate tax evasion.  

UBS AG, in particular, has been targeted by multiple countries. The United States launched a full-scale investigation of the bank and settled the case back in 2009. Now, France is also conducting an investigation into the same bank.

As part of the French investigation, a UBS whistleblower has been subpoenaed and will be traveling to Paris to comply with the request to provide documentary evidence and testimony.  The whistleblower is the same one who helped the United States make its case against the bank. 

Whistleblowers receive strong financial incentives for coming forward and it is likely that there will be more people in the future reporting on banks that help investors hide assets and evade tax obligations.  This has an impact not just on the bank, but also on individual investors. A Washington DC criminal tax lawyer can provide you with assistance if you are under investigation (or fear you may be investigated in the future) for offshore accounts you have not declared.

Whistleblowers Receive Financial Incentives to Provide Testimony

The whistleblower who assisted the United States with its investigation against UBS AG is named Bradley Birkenfeld.  He began cooperating with authorities in the United States in 2007 to help the government investigation into the practices of UBS. Specifically, the U.S. authorities were looking for information showing that UBS has actively assisted clients in maintaining undeclared offshore accounts in order to avoid taxes. 

Switzerland had very strong banking privacy laws at the time and the U.S. government believed that UBS was using those laws to help shield the accounts of U.S. investors from detection to make it easier for account holders to avoid paying taxes on their offshore income.

Birkenfeld played such a significant role in the U.S. investigation that many believe he was fundamental in bringing down the bank.  UBS resolved the allegations against it by paying a $780 million penalty as part of a deferred prosecution agreement.  The information that Birkenfeld provided was also instrumental in forcing Switzerland to actually change its international treaty with the United States. 

Because of Birkenfeld’s information, the largest bank in Switzerland ended up having to provide the names of 4,900 U.S. citizens with offshore accounts to taxing authorities.  Most experts believe that the testimony Birkenfeld will be providing in France is also going to increase pressure on UBS in the investigation going on there.

Whistleblowers are richly rewarded and Birkenfeld ended up receiving a $104 million IRS whistleblower reward.  Obviously, this kind of money can incentivize many people with knowledge of undeclared accounts to come forward. 

Investors need to know they are at imminent risk of having offshore accounts disclosed to the IRS and should plan accordingly.  Now is the time to talk to Kevin Thorn, a DC criminal tax lawyer, if you fear your account information could be turned over or has already been provided to taxing authorities.


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