UBS AG's $780 million settlement with U.S. authorities to avoid prosecution for helping Americans cheat on their taxes has opened a Pandora's box for banks worldwide.
A U.S. tax program encouraging UBS clients to avoid criminal inquiries by declaring offshore accounts before Sept. 23 is prompting a flood of disclosures by customers of Zurich's Credit Suisse Group AG and Julius Baer Holding AG, LGT Group in Liechtenstein, HSBC Holdings PLC, and Bank Leumi Le-Israel Ltd., tax attorneys said.
This may give the Internal Revenue Service ammunition to target other overseas wealth managers as it seeks to crack down on tax evasion. UBS, the largest Swiss bank, avoided prosecution on Feb. 18 when it paid a $780 million penalty and disclosed secret data on 250 clients. In August, UBS agreed to name another 4,450 clients.
"It is very possible that the IRS will be able to get strangleholds over the other banks because they'll have specific information which will permit them to bring specific allegations of wrongdoing before the U.S. courts," said Robert Fink, a lawyer at Kostelanetz & Fink in New York.
Fink, whose firm handled more than 250 disclosures, said his clients told the IRS about accounts in a dozen Swiss banks, as well as banks in Germany, England, Italy, Belgium, Singapore and Hong Kong. Lawrence Horn, a lawyer at Sills Cummis & Gross in Newark, N.J., said his clients declared accounts at Bank Hapoalim Ltd. in Israel, as well as banks in the Bahamas, Grenada and the Cayman Islands.
