UBS must give information to the US tax authority about US clients of Wegelin, the venerable Swiss bank that has pleaded guilty to helping clients dodge taxes. UBS later told this publication that the request does not apply to UBS client information.

US District Judge William Pauley, sitting in a Manhattan Federal Court, authorised the Internal Revenue Service to serve a summons on UBS. The tax agency seeks records of Wegelin’s correspondent account at UBS, according to the order that was announced yesterday.

Those records will allow US authorities to determine who held assets at Wegelin and other Swiss institutions using the UBS account, Bloomberg reported, citing US attorney Preet Bharara.

“The court order refers exclusively to information in the US. It does not refer to UBS client data, and no data from Switzerland is concerned. The UBS cross-border issue was concluded for good in 2010. With the order, the US court demanded information about transactions, which Wegelin executed via its publicly known correspondent banking relationship with UBS in the US. A correspondent bank account is a standard service for third-party banks that do not have local representation. UBS will comply with local legal obligations," UBS told this publication in an emailed statement. 

It is understood that the correspondent bank account that Wegelin maintained at UBS Stamford is a general account held in Wegelin's name that Wegelin used for its business purposes. UBS Stamford does not maintain accounts for Wegelin's US clients.

Admission of guilt

On 3 January, Wegelin admitted it helped US taxpayers hide more than $1.2 billion in assets from the IRS. Wegelin, which already transferred non-US assets to regional Swiss bank Raiffesen in the wake of US legal action last year, finally shut its doors permanently this month. The bank’s history dates back to 1741.

In his statement, Bharara is quoted as saying: “Today’s summons is the latest step in our efforts to identify and prosecute US taxpayers who think they can evade their legal responsibility to pay taxes by secreting their money away in anonymous offshore accounts at Wegelin and other banks.”

Pauley gave permission to the IRS to serve a so-called John Doe summons on UBS. In a court petition, assistant US attorney Natalie Kuehler said Wegelin held a correspondent account through a UBS office in Stamford, Connecticut.

“Wegelin used the UBS correspondent account to provide offshore banking services to dozens of US taxpayers, who the IRS believes may have failed to report the existence of their Swiss bank accounts to the IRS and the Department of Treasury,” Kuehler wrote in the 25 January filing.

In an indictment last year, prosecutors said that more than 100 US taxpayers conspired with Wegelin and Swiss bankers Michael Berlinka, Urs Frei and Roger Keller to hide income from the IRS.