Swiss Bank UBS Continues to Have Tax Problems: UBS France Now Under Fire

Four years ago, US tax probes into UBS found the bank aiding wealthy American clients evade paying federal taxes by placing their funds into secret Swiss bank accounts. The settlement, one of the largest in history, consisted of UBS paying over $780 million to the United States and, most controversially, handing over the names and account information of about 4,500 US taxpayers.

Switzerland is famous for its strict bank secrecy laws. These laws prevent divulging any information about their clients and customers unless there is a recognized criminal investigation. These laws, while strongly touted and defended by the Swiss, are often the shield that many tax evaders and criminals use to hide and launder their funds. It was no small shock, therefore, when UBS agreed (with a directive from the Swiss government) to hand over the information of their American customers.

Now, France is initiating a tax probe of its own into the French subsidiary, UBS France. Under French law, only French-registered entities can open up accounts and services for French nationals. It is alleged, however, that UBS France was colluding with its main Swiss counterpart to secretly open accounts for wealthy French customers. The alleged methods seem like something straight out of a movie: plainclothes Swiss bankers would enter France with an encrypted computer, which would only launch sensitive bank documents if a game of Solitaire were played, and using the jargon of Swiss dairy farmers would rendezvous with clients at operas and tennis matches.

It’s unclear if the new French tax probes will result in a similar fate for UBS as it did back in 2009 here in the United States. But given the numerous former employees who have stepped up to allege these activities, it is no wonder that French authorities have begun an investigation. But it is certain that Switzerland will not give in to violating its coveted bank secrecy laws without a fight.