US Government Pressing UBS to Identify Secret Accounts

The U.S. Justice Department said Tuesday it was pursuing its five-month-old lawsuit against UBS to force the Swiss bank to identify thousands of U.S. clients with secret accounts at the Swiss bank.

Steffen Schmidt / AP UBS headquarters in Zurich, Switzerland.

"The United States has a strong national interest in making sure that all U.S. taxpayers comply with the tax laws, including disclosing their offshore accounts, and paying all the taxes they owe," the department said in a brief filed with a Florida court.

The U.S. government sued UBS in February in the U.S. Southern District Court of Florida, seeking the names of 52,000 Americans suspected of using the bank to hide nearly $15 billion in assets and evade U.S. taxes.

"The United States has proven its case for enforcement. The Court should order UBS to comply in full," the department said in its brief.

No representative of UBS was immediately available to comment on the brief, but a court hearing has been scheduled for July 13.

The case is: United States v UBS AG; 1:09-CV-20423.

Earlier, a source told Reuters that U.S. clients of the Swiss bank will not be able to access secret accounts from July 1 unless they transfer the money onshore or close the account, a source familiar with the situation told Reuters on Tuesday.

With the move, UBS was seeking to speed up its withdrawal from a controversial offshore business for U.S. clients, which is at the center of a U.S. tax row.

Washington has accused the wealth management giant of helping Americans hide billions of dollars abroad and UBS agreed in February to pay $780 million to avert criminal charges.

But the Swiss giant is still embroiled in a civil lawsuit in which the U.S. Internal Revenue Service is trying to get information on the 52,000 U.S. accounts and it faces a first court hearing on July 13.

"Starting from the beginning of July U.S. clients will not be able to access information about their accounts unless they tell UBS they either want to transfer the money to a U.S.-regulated entity or to another bank," the source said, confirming an earlier report by Swiss news agency AWP.

The decision concerns deposit accounts that clients use to carry out financial transactions but current accounts are not affected, the source added.

The bank, which declined to comment, faces a potentially onerous fine in the United States and wants to quickly exit the business.

But some clients are taking too long to make up their minds, the source said.

June 30 is the annual deadline for reporting foreign accounts to the IRS and is also the deadline for U.S. authorities to file their opinion in the UBS case ahead of the July 13 court hearing.

As part of the February criminal settlement UBS promised to quickly exit the business of providing banking services to U.S. clients with undeclared accounts.

Earlier this year UBS sent "termination letters" to U.S. clients with undeclared Swiss accounts, asking them to come clean, move the money to another bank or face the closure of the account.

The letters gave clients 45 days to make a decision, after which UBS would initiate steps to terminate the accounts, according to a tax lawyer who read out one of the letters to Reuters.

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