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News : International Last Updated: Oct 22, 2013 - 8:55 AM


Swiss banker arrested in Italy; Faces US extradition on aiding tax evaders
By Michael Hennigan, Finfacts founder and editor
Oct 22, 2013 - 5:27 AM

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Raoul Weil, a former UBS wealth management chief, was arrested last weekend in Italy and faces extradition to the United States to answer charges of aiding and abetting tax evaders. Weil left Switzerland’s biggest bank in 2009 after he was declared a fugitive from US justice by ignoring a criminal indictment issued in 2008. UBS was forced to pay a $780m fine in 2009 after admitting to actively assisting US tax evaders to break US law.

Several Swiss bankers and lawyers have since been indicted in the US for their alleged role in helping wealthy US citizens hide their assets from the tax authorities.

Weil is one of the most high-profile of the accused as a then head of UBS’s wealth management and he is now a temporary resident of an Italian prison, likely fearing a longer spell in a US one.

A Florida court indictment charged Weil with having a prominent role in aiding UBS’s US clients to hide around $20bn in undeclared assets between 2002 and 2007. He however has strongly denied the allegation but would not risk defending himself in a US court.

Since 2008, the US government has been aggressively moving against both US taxpayers who have undeclared foreign accounts and Swiss banks, including triggering the closure of Wegelin & Co., founded in 1741, which was the oldest bank in Switzerland and said to be he 13th oldest in the world.

This may seem hypocritical given that US companies are the ringleaders in corporate tax avoidance and evasion, by alleged “job creators and innovators.”  It is of course hypocritical and we operate a similar Bodhaire Uí Laoire towards the corporate side in contrast with the aggressive attitude of the Revenue to personal users of tax havens.

However, the Swiss banks  were not fragile Alpine flowers. After UBS admitted guilt, private banks like Wegelin offered the  American tax evaders new homes for their wealth.

The Foreign Account Tax Compliance Act (FATCA), which was signed into US law in early 2010 as part of the Hiring Incentives to Restore Employment Act, requires foreign financial institutions to report information regarding US persons maintaining accounts, and by directing that US taxpayers report certain specified foreign financial assets with their tax filings.

Bologna police confirmed on Sunday that they had arrested Weil at a hotel in the city. He is reported to have been travelling under his real name which alerted the Italian authorities to the international arrest warrant.

Weil is a managing partner at Reuss Private Group, a financial consultancy company based in Pfäffikon, canton Schwyz, according to the firm’s website.

In a statement on Monday, Reuss Private Group said it had been informed on Sunday of the arrest.

“Raoul Weil has worked for Reuss Private Group since 2010, first as a consultant, and then, since the beginning of this year, as its CEO,” the statement said.

“Raoul Weil does not have any functions at Reuss Private AG, a Bremgarten-based asset manager owned by Reuss Private Group that is licensed by the Swiss Financial Market Supervisory Authority FINMA to operate as a securities dealer.”

The Reuss website says Raoul Weil has a degree in business and economics from the University of Basel, as well as having done advanced studies at the Kellogg School of Management in the United States.

Last week the Zurich-based Bank Frey has decided to close, citing an inability to meet rising costs and obligations associated with the US tax evasion fight. The move was voluntary, as the private institution remains solvent and won't be liquidated.

“As a result of developments in recent years, circumstances and challenges have presented themselves, especially in Switzerland, that mean it no longer makes sense for a small bank to continue its cross-border services,” said Markus A. Frey, the chairman of the board who founded the institution in 2000. “Bank Frey will therefore cease its operative business activities as a bank.”

Swissinfo says that although the US Department of Justice (DoJ) recently offered Swiss banks a unilateral programme to address tax evasion and banking secrecy disputes, Bank Frey is part of the 14 “Category One” banks who could not participate because they are involved in ongoing legal proceedings.

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