US wins court order for UBS bank records; steps up probe

04 July 2008

Mumbai: US authorities have secured a court order to seek information from UBS, Switzerland's largest bank, on US taxpayers suspected to be avoiding income taxes.

The order, issued by a US district judge in Miami, allows the US Internal Revenue Service to serve a summons on UBS to obtain information on possible fraud by people with unestablished identities.

The order by Judge Joan Lenard, issued on a justice department request for bank records, puts further pressure on Switzerland's secretive banks to open up. The court ordered that UBS hand over the names of as many as 20,000 of its US customers.

The probe followed last month's revelations by a former UBS banker, Bradley Birkenfeld, that he helped defraud the IRS by assisting UBS clients in avoiding US reporting requirements on income in Swiss bank accounts.

UBS employees helped wealthy US clients to conceal their ownership of assets held offshore by creating bogus entities and then filing IRS forms falsely claiming the entities owned the accounts, Bireknfeld told the court while pleading guilty.

Birkenfeld also revealed that he even helped a client by purchasing diamonds with the client's Swiss bank account funds and then smuggling them into the US inside a toothpaste tube.