Banking giant UBS has agreed to pay $780 million ($NZ1.56 billion) and turn over once-secret Swiss banking records to settle allegations it conspired to defraud the US government of taxes owed by thousands of American clients.
As part of the deal struck in a federal court in Fort Lauderdale, Florida, UBS has taken the unprecedented step of agreeing to turn over to the US government account information for US customers of the bank's cross-border business.
In doing so, federal authorities have struck a big crack in Switzerland's vaunted bank secrecy laws.
UBS will pay $780 million in fines, penalties, interest and restitution for conspiring to create sham accounts in order to hide the assets of US customers from the US government.
The financial hit on UBS is more than double a penalty imposed by federal authorities just last month against a different international bank, Lloyds TSB Bank PLC, for helping its clients skirt US sanctions against Sudan, Iran, and Libya.
"We accept full responsibility for these improper activities," Peter Kurer, chairman of Swiss-based UBS AG, said in a statement.
He added that the bank was determined to abide by the terms of the deal with US criminal and securities officials.
"Client confidentiality, to which UBS remains committed, was never designed to protect fraudulent acts or the identity of those clients, who, with the active assistance of bank personnel, misused the confidentiality protections," he said on Thursday.
About 17,000 American clients concealed their UBS accounts from the Internal Revenue Service, the US tax-collection agency, hiding assets of roughly $20 billion in total, US officials said.
