Following the Money, After Its Swiss Exit

By PAUL SULLIVAN (New York Times)
Published: January 9, 2009
Swiss banking has a tradition of secrecy and service that dates back 250 years. But for one group of very rich Americans, that haven is at an end, with consequences for all United States citizens who have relied on secretive offshore accounts to keep their financial means private and their tax bill artificially low.

Americans holding such accounts at UBS, the world's largest wealth manager, are about to have their funds returned to them — an estimated $18 billion — under pressure from the Justice Department. Prosecutors say the bank has about 19,000 accounts that have enabled United States citizens to evade at least $300 million a year in taxes — not including interest and penalties for delinquency.

UBS has been under investigation ever since Bradley C. Birkenfeld, a Boston-born former director in the bank's Geneva office, began turning over information about the firm's offshore accounts after leaving the firm in 2006. His decision — arising from a bonus dispute — put UBS in a bind. One result is that the bank closed the division that catered to Americans with Swiss-based accounts that the Internal Revenue Service did not know about.

After tracking them down, UBS is poised to move their money into accounts the I.R.S. will see — into a new account at the bank, over to another bank or to them directly as a check in the mail. As my colleague Lynnley Browning pointed out Friday in her article reporting the UBS plan, these methods all raise the possibility of paper trails that will make it easer for the I.R.S. to track down the tax evaders.