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Home > Regulation > UK Regulation

By Ashley Wassall | Published Jan 04, 2013

Oldest Swiss bank to close as US tax clampdown continues

The oldest bank in Switzerland is to formally close after it pleaded guilty to charges that it facilitated widespread tax evasion by US citizens using its offshore accounts, bringing to an end a year-long legal battle.

Wegelin, which was founded in 1741 and specialised in private banking and asset management services, entered the plea at Manhattan Federal Court yesterday (3 January) as part of a deal that saw it also agree to pay $57.8m (£36m) in restitution and fines.

The bank is just one of dozen of institutions both in the US and abroad that has been charged with colluding in tax evasion by wealthy US citizens, but it is believed to be the first overseas bank to have entered a guilty plea.

It was formally charged with the offences last February, just a week after it transferred the majority of its Swiss clients to its related entity Notenstein Private Bank, citing the “increasingly threatening situation” that was posed by the ongoing negotiations with US regulators.

Alongside the client transfer, Wegelin sold all of its non-US activities to Swiss co-operative banking group Raiffeisen.

The range of cases against global banking groups stem from leads arising from a landmark 2009 deal with Swiss banking giant UBS that saw it pay $780m in restitution and fines (£486m) and strike a deal that deferred prosecution indefinitely.

Wegelin used a correspondent bank account it held with UBS in Stamford, Connecticut to access the US banking system, where it otherwise had no activities.

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