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UBS, Stanford Propel Offshore Crackdown

New York (HedgeCo.Net) – A federal judge has set a July 13 hearing for UBS, in which they may be forced to disclose names associated with 52,000 secret Swiss bank accounts holding more than $14.8 billion in assets.  UBS continues to assert that by providing these names, they are compromising overseas privacy laws as well as the reputation of the bank.    

”Such violations would expose these employees to substantial prison terms, as well as fines, penalties and other sanctions,” UBS said in a court filing last week. “There is simply no reason to have, nor equity in having, such an expedited process here.”

UBS is feeling the heat from a surge of international pressure to crack down on secret tax havens sought by the wealthy.  Estimating the U.S. loses $100 billion a year from offshore tax abuse, President Obama is at the forefront of the campaign to get tough on tax evasion. 

While his Stop Tax Haven Abuse Act was aimed at secret financial centers in the Caribbean, Switzerland has long been regarded as a popular place to stash assets without the watchful eye of Uncle Sam to worry about.  Switzerland does not believe that tax evasion is a crime.    

UBS has already agreed to pay the U.S. $780 million in damages, with $200 million of that going to settle charges brought on by the Securities and Exchange Commission. They have also agreed to exit the U.S. cross-border banking business and close the existing offshore accounts of their American clients.

Offshore banking has also been cast in a bad light thanks to the recent Antigua-based scandal masterminded by Texas financier Robert Allen Stanford.  Stanford’s companies, including Stanford International Bank, are estimated to make up about 10% of the country’s economy with billions in deposits coming from all over the world. 

In 1999, the U.S. blacklisted Antigua, accusing the country of lax regulation and subpar anti-money laundering laws.  The sanctions were lifted in 2001.  Still, deposits in the region continued to soar, and the country insists that their regulatory system is strong.  Antigua is currently conducting their own investigation in the Stanford matters.  

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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