There is a flurry of news this morning about UBS, probably the most egregious of Swiss banks in the business of enabling U.S. tax cheats:
1. The United States filed papers today to drop the criminal case. See the reports from USA Today here and Bloomberg here.
2. The Swiss bank regulator called on the Swiss banks to overhaul their services for wealthy foreigners to avoid the type of debacle with the U.S. tax authorities. See the WSJ report here. I suppose that what the Swiss banks will do is not to abandon the business, but become smarter at it. The Swiss banks make their money, not because they can better manage money and investments than other banks in the world but because, at least until recently, they were better at hiding it from prying eyes. It is unlikely that the Swiss will abandon such a lucrative market (there are still people willing to pay plenty to hide money, be they tax cheats, drug dealers, Middle East potentates raking off money from their citizens, or whatever). So, the Swiss bankers will just have to be smarter and move into deeper stealth mode. It remains to be seen whether the Swiss Government will be diligent in curbing those types of activities or will only do the superficial thing here.
3. In a related development, the Swiss are reported to be close to some type of deal with the German Government regarding accounts owned by German taxpayers. See Reuters article here.
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