Offshore Banking War Escalates
The latest round of the U.S. crackdown of tax evasion through the utilization of undeclared offshore bank accounts has the US significantly upping the stakes of the game. The U.S. Department of Justice has indicted Wegelin & Co, founded in 1741 - which makes it the oldest Swiss bank, for helping former U.S. clients of banking giant UBS move their undeclared accounts to avoid detection by the IRS. In anticipation of this indictment, Wegelin sold all of its other non-U.S. assets to a new bank, leaving the old bank only with a billion or so of toxic U.S. accounts. Three of the Wegelin bankers have also been indicted, and this basically means that a U.S. law enforcement agency has effectively shut down a Swiss bank. Amazing.
Stories are also circulating that nearly a dozen other Swiss banks are trying to negotiate a settlement with the U.S. to avoid being indicted themselves. Although Switzerland is probably the best known haven for U.S. taxpayers trying to stay off the IRS’s radar, it certainly is not the only player in that game. It appears as if, however, that its game with the U.S. is coming to an end.