Offshore private banking lives on
Limited UBS agreement to disclose account details to IRS should not fatally damage the sector.
Many private bankers are claiming that the offshore sector of their business is dead. However, the agreement in August between UBS and the US authorities for the Swiss bank to provide the details of about 4,500 US account holders to the Internal Revenue Service is the best outcome that Switzerland and other offshore jurisdictions could have wished for. The US administration is targeting offshore tax havens but at least the agreement is between the US and only one bank, rather than Switzerland as a whole. It is certainly more lenient than the original demand for details of 52,000 US accounts.
It’s not great news for UBS admittedly. The Swiss bank has been something of a punchbag for the US authorities and it will now be associated with helping tax evaders. The bank has already handed over 250 names of suspected tax cheats and has paid $780 million to the US government. That said, 90% of UBS’s US clients remain unaffected.
The Swiss authorities, however, must be relieved. The agreement does not violate their banking secrecy laws, which do not condone tax evasion. And reducing the request for information is an acceptance by the US that most offshore assets comply with international standards.