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Old Swiss bank, new foreign account reality

Five hundred years ago, in the age of European exploration, America was thought of as a New World. And in many ways, the clash between old and new has continued to this day.

This is certainly true regarding U.S. tax law on foreign accounts and a highly respected Swiss tradition of bank account privacy. In one recent case, federal prosecutors in New York obtained a guilty plea from Switzerland's oldest bank to charges of assisting Americans with tax evasion.

The bank was Wegelin & Co, which was founded in the mid-18th century. For over 200 years, the bank was part of a deeply held Swiss tradition of bank secrecy. In the last few years, however, American authorities have increasingly sought to enlist the cooperation of foreign financial institutions in helping to collect taxes from Americans with offshore accounts.

Wegelin & Co.'s guilty plea was to conspiracy to engage in tax evasion. The bank acknowledged that it had participated in enabling over 100 American taxpayers hide assets over the course of about a decade, from 2001 to 2011.

Wegelin & Co. must pay at least $74 million in fines and penalties in connection with the case. In addition, three bankers from Wegelin have been charged individually. All three reside in Switzerland and have not been apprehended by authorities.

This is not the first time that the U.S. government has gone after a prominent Swiss bank on tax evasion charges. In 2009, the U.S. and the major Swiss bank UBS resolved a case involving tax evasion charges and American account holders. As part of that settlement, UBS eventually agreed to pay $780 million in fines and restitution and to disclose the identities of numerous U.S. customers to American authorities.

Source: "Switzerland's oldest bank pleads guilty to aiding U.S. tax evasion," CNN Money, James O'Tolle, 1-3-13

Our firm handles situations similar to those discussed in this post. To learn more about our practice, please visit our California tax evasion page.

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