Americans stash away $1.5trn in tax havens.

WASHINGTON: UBS bank vowed to stop offering offshore banking services in the US after legislators accused it and other banks of helping wealthy

Americans hide about $1.5 trillion in overseas tax havens.

UBS chief financial officer of global wealth management Mark Branson made the vow as a senate panel was told that the country had lost $100 billion in revenue to tax cheats hiding money with the help of foreign banks.

"We have decided to exit entirely the business in question," Branson said.

The hearing centred on a 115-page report into alleged abuses by UBS in Switzerland and the smaller LGT Bank in Liechtenstein.

"The evidence we have been able to obtain breaks through some of the wall of secrecy to show that these two banks have employed banking practices that facilitate, and have resulted in, tax evasion by US clients," said senator Carl Levin, who led the six-month investigation.

The offshore tax evasion problem is of "staggering proportions," said Senator Norm Coleman.

"These tax havens hold an estimated $1.5trn in American assets, resulting in lost taxes of roughly $100bn," he said.

The OECD group of mostly industrialised economies estimates that between five to $7trn are held in tax havens or banking secrecy jurisdictions globally. In response to the Senate probe, UBS, the world's largest manager of private wealth, said 19,000 of the 20,000 US client accounts in Switzerland were "undeclared" in the range of nearly $18bn.

US authorities have initiated enforcement action against 100 US taxpayers in connection with accounts in the secretive European principality of Liechtenstein after a former LGT employee provided tax authorities around the world with data on about 1,400 people with bank accounts.

The ex-employee, who has gone into hiding, gave the US probe panel 12,000 pages of documents related to US clients.

Former UBS banker Bradley Birkenfield had already pleaded guilty to conspiring to help US clients evade millions of dollars in taxes by hiding assets in Switzerland and Liechtenstein.

Another UBS official was detained as a "material witness."

The enforcement actions appear to represent the first time that the US has criminally prosecuted a Swiss banker for helping a US taxpayer evade US taxes.

"The details of their tax evasion scheme are sordid enough," Levin said.

The Senate panel had also obtained a document showing that UBS provided its Swiss private bankers with training on how to detect surveillance by US customs agents and law enforcement officers while travelling to the US, he said.

Copyright A[umlaut] 2008 Gulf Daily News

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