Monday, April 6, 2009

Is UBS Deferred Prosecution Agreement Paying Off?

On April 2, the DOJ announced that they had charged a Boca Raton, Fla, accountant with filing a false income tax return because he failed to disclose his ownership of a foreign financial account at, you guessed it, UBS. Coincidentally, he also failed to report the income he earned on the account.

The accountant set up his account in Switzerland in the name of a nominee British Virgin Islands corporation. This appears to be the standard ploy UBS used to avoid having to disclose accounts owned by American citizens. UBS bankers, operating in the U.S. apparently told customers to set up entities in offshore jurisdictions and transfer the money to UBS from those offshore accounts. In this way UBS could claim not to know that the offshore accounts were really owned by U.S. citizens and could avoid disclosing the accounts to the IRS.

UBS has admitted that it conspired to defraud the U.S. and agreed to cooperate with the ongoing criminal investigation but to date has disclosed only a few of its U.S. customers who participated in the scheme. UBS also agreed to pay a $780 million fine.

It looks like the U.S. is really serious about cracking down on Americans who hide their money abroad.

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