Source: Financial Times

US Congressional investigators will on Thursday accuse UBS (NYSE:UBS) and Liechtenstein's LGT Group of using the "cloak of bank secrecy laws" to help American clients evade billions of dollars in taxes.
A 100-page report to be released by the Senate permanent subcommittee on investigations details allegations about how the banks "colluded" with US clients to help them shield taxable income from regulators even though they knew their clients were seeking to hide from the Internal Revenue Service.

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Methods allegedly used by LGT included advising US clients to open accounts in the name of foundations to hide ownership and counselling them on the use of offshore structures and "transfer corporations" to disguise transfers via LGT accounts.

UBS told committee investigators it holds 19,000 accounts worth roughly $18bn for US clients that it has not declared to the IRS. In 2001, when new tax rules under the so-called Qualified Intermediary programme required foreign banks to disclose the names of clients holding US securities, UBS's US clients in Switzerland sold more than $2bn in such assets to avoid disclosure, the report claims.

"UBS allowed these clients to continue to maintain accounts in Switzerland, and helped them to reinvest in other types of assets that did not trigger reporting obligations to the IRS, despite evidence that the US clients were using the accounts to hide assets from the IRS," the report found.

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