US prosecutors are seeking to dismiss criminal charges against UBS after the Swiss bank fulfilled its obligations under a deferred prosecution agreement struck last year.
As part of the 18-month agreement reached between prosecutors, the US government and UBS in February 2009, the Swiss bank has handed over the names of about 250 US clients alleged to have evaded US taxes, agreed to dismantle its cross-border business in the US and consented to pay a USD780m fine, representing disgorgement of profits from the cross-border business and unpaid withholding tax together with interest and penalties.
"UBS AG has fully complied with all of its obligations," senior litigation counsel Kevin Downing wrote in the filing, going on to add that the US government now feels that "dismissal is appropriate." Dismissal of the case requires court approval, however.
A related civil case is also expected to be withdrawn after an administrative assistance agreement between the US and Switzerland allowed details of a further 4,450 US clients of UBS to be handed over to the US authorities.
Last Friday's filing to dismiss the criminal proceedings coincided with the publication of a paper by the Swiss financial regulator FINMA, which highlighted the legal risks Swiss financial institutions face when operating in foreign countries.
"As part of its ongoing supervision, FINMA will in future increasingly assess whether supervised institutions are aware of the risks inherent in their cross-border operations and take appropriate measures to mitigate them," FINMA said.
"Tax legislation is a further source of risk," the regulator observed.
"The danger here is that financial intermediaries or their employees may become a party to tax offences committed by foreign clients under foreign law. In some jurisdictions, criminal offences may even include acts performed exclusively or largely outside the country, e.g. on Swiss territory," FINMA stated.
.Tags: tax | law | offshore | agreements | individuals | banking | court | offshore banking | offshore confidentiality | mutual assistance agreement | withholding tax | Switzerland | United States | interest | penalties | Switzerland
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