UBS has confirmed that it is again being investigated by U.S. regulators for helping wealthy Americans evade taxes, this time involving the sale of "bearer bonds" that allow investors to transfer ownership anonymously.
Bearer bonds, which are generally illegal in the United States, are still common in Europe and have historically been used as a tool for money laundering and tax evasion. These securities are issued by corporations or governments without any ownership records being kept. Like currency, whoever is in physical possession of the bond owns it.
In 2009, UBS entered into a deferred prosecution agreement with the United States and paid a fine of $780 million. The U.S. also filed a civil suit against the bank, forcing it to reveal the names of 52,000 American customers. Several of these clients have been criminally prosecuted for holding undeclared offshore accounts, including Beanie Babies founder Ty Warner. Raoul Weil, a member of the bank's executive board, was a fugitive for five years before being extradited to the U.S. in 2013. His recent acquittal made headlines in Switzerland, where he was hailed as a national hero for taking on the U.S. Justice Department.
While it is legal for Americans to own offshore accounts, those with offshore accounts exceeding an aggregate balance of $10,000 must file an FBAR each year, as well as reporting any foreign income, including interest or dividends. Those who fail to comply with these reporting requirements can face substantial civil and criminal penalties. The IRS currently has programs in place for those who wish to voluntarily disclose their foreign accounts, including the Offshore Voluntary Disclosure Program and the Streamlined Compliance Procedures. Americans who wish to take advantage of these programs must come forward voluntarily before the government learns of their accounts.
The new allegations against UBS, if true, could open the bank up to new criminal charges. If the 2009 deferred prosecution agreement was violated, they could also face prosecution for previous charges.