Switzerland to defy US; threatens to seize UBS client data

Having acquired fame for its legendary banking secrecy status, Switzerland has threatened UBS AG, the country's biggest bank, that it would rather seize its documents related to data of 52,000 US clients than allow the bank to transfer them to US courts.

UBS is accused by the US Federal authorities of facilitating tax evasion for its American customers by concealing their ownership of assets held offshore through bogus entities and then filing IRS forms falsely claiming the entities owned the accounts.

In February, the US Justice Department filed a lawsuit in the federal court in Miami to compel UBS to disclose the names of as many as 52,000 Americans who have hid billions of dollars in UBS Swiss accounts and evaded paying tax in the US. (See: US justice dept hauls UBS to court to force disclosures)

US authorities have secured a court order to seek information from UBS on US taxpayers suspected to be have avoided paying income taxes. The order, issued by a US district judge in Miami, allowed the US Internal Revenue Service to serve a summons on UBS to obtain information on possible fraud by people with unestablished identities. (See: US wins court order for UBS bank records; steps up probe)

UBS had always maintained that it could not reveal the names of its 52,000 American clients, since it would be liable for prosecution in Switzerland under the Swiss banking secrecy laws.

The Swiss government said in a filing with the Miami court, that it ''Will use its legal authority to ensure that the bank cannot be pressured to transmit the information illegally, including if necessary by issuing an order taking effective control of the data at UBS that is the subject of the summons.''