Lifting the Veil of Secrecy That Hides Swiss Bank Accounts
The Wall Street Journal reports today that UBS will hand over to the United States Internal Revenue Service some 4,450 names of American account holders as part of a U.S.-Swiss tax-evasion settlement and investigation that could produce up to 10,000 account identities. The U.S. had originally sought the names of 52,000 Americans holding secret accounts at Swiss banks, but IRS Commissioner Doug Shulman said this morning that the agreement gives the IRS substantially all the information it was interested in. This was the second legal settlement between the U.S. and UBS this year. To avoid criminal prosecution, UBS admitted in February to helping wealthy Americans shirk their tax obligations and agreed to pay $780 million in penalties and reveal the names of roughly 250 U.S. customers who allegedly set up sham accounts.
The earlier settlement prompted Wharton professor of operations and information management, Maurice Schweitzer, to declare that "Swiss banking as we have known it is dead." In an April Knowledge at Wharton article, titled "The Other Banking Drama: Those Secret Swiss Accounts," Schweitzer said that turning over the 250 client names put a "chink" in the system that will destroy the trust of wealthy people around the world in Swiss bank accounts. "Secrecy is at the heart of Swiss banking. This UBS case shakes that foundation of trust that clients had placed in Swiss banks regarding the secrecy [of] those accounts."
With the settlement announced today, the chink appears to have grown into a barn door. But the potential tax revenue to be harvested from those accounts won't put even a chink in the U.S. budget deficit. The accounts in question contained more than $18 billion, Shulman said.
