Ripples from the UBS AG tax evasion case continue to reach other overseas banks, prompting them to put their houses in order — and even show uncooperative clients the door.
Copies of letters obtained by Dow Jones Newswires show several banks giving U.S. customers a deadline to provide tax details or see their accounts closed. Some have simply told clients to take their assets elsewhere.
LGT Bank and Credit Suisse are among those threatening to oust some clients amid the uproar over UBS, which settled with U.S. tax authorities last month by agreeing to turn over the identities behind 4,450 secret accounts.
A letter from LGT Bank in Liechtenstein, for example, dated June 30, gave U.S. customers until this week to submit completed Form W-9s and another form with U.S. tax details. LGT told recipients it would "terminate our business relationship with you in connection with the above-mentioned account" if the bank did not get the information by Aug. 31.
The Justice Department and Internal Revenue Service have consistently declined to say whether they are investigating specific banks beyond UBS. However, IRS officials said when they announced the settlement that the Swiss government had agreed to review and process additional requests for information from other banks on account holders "to the extent that such a request is based on a pattern of facts and circumstances equivalent to those of the UBS case."
Roy Black, a partner in Black, Srebnick, Kornspan & Stumpf in Miami, said there is "no doubt the government won't stop with UBS."
"I can assure you they are putting equal pressure on every offshore bank they can find," he said. His firm, which is located in a hub of UBS activity, has created a special unit to deal with the large number of cases flooding in.
The LGT letter came after the bank's decision in early 2008 to scale down its business with U.S. clients, according to Christof Buri, a spokesman.
LGT told the U.S. Senate Permanent Subcommittee on Investigations in July 2008, during a hearing at which UBS also testified, that it had never actively pursued U.S. business. This business had always been of secondary importance to it, the bank said.
Unlike the LGT letter, which gave customers a chance to continue at the bank, a series of three letters from Credit Suisse Private Banking to U.S. clients simply instructs them that their accounts are being terminated. The letters were dated May 26, July 1 and July 14.
The July 14 letter said that, if the recipient did not provide information by Aug. 14 for Credit Suisse to transfer the assets to an account elsewhere, the bank reserved the right to deposit the "relevant assets with the competent Swiss authority in accordance with applicable Swiss law or take other steps we deem appropriate to close the business relationship."
Credit Suisse declined to comment on the letters, but spokesman David Walker said in an e-mail that in the normal course of business the company continues "to assess all client relationships."
"We strongly believe we have the right compliance standards in place and adhere to all applicable laws," he wrote in the e-mail.
A letter from a third bank gave account holders until Sept. 30 to give it various tax-related documents, including a W-9 and a form declaring the offshore account to the IRS. The source who provided a redacted copy of the letter declined to identify the bank.
Asher Rubinstein, a partner in the Rubinstein & Rubinstein LLP law firm, said that the push to get rid of U.S. clients or make sure their offshore accounts are tax-compliant is hardly surprising, given the current move against tax havens by many governments. Foreign banks do not want to be "the next UBS," he said.
Now, he added, banks are doing their own work to make sure accounts comply with tax rules; they no longer take clients' word that they are filing all the right forms and paying their taxes.
