Oldest Swiss bank closing down after tax evasion fine

Switzerland’s oldest bank is to close permanently after pleading guilty in a New York court to helping Americans evade their taxes. Wegelin, which was established in 1741, has also agreed to pay $57.8 million in fines to US authorities. It said that once this was completed, it “will cease to operate as a bank”.

The bank had admitted to allowing more than 100 American citizens to hide $1.2 billion from the Internal Revenue Service for almost 10 years.

Wegelin, based in the small Swiss town of St Gallen, started in business 35 years before the US declaration of independence. It becomes the first foreign bank to plead guilty to tax evasion charges in the US…

US Attorney Preet Bharara said: “The bank wilfully and aggressively jumped in to fill a void that was left when other Swiss banks abandoned the practice due to pressure from US law enforcement.”

He added that it was a “watershed moment in our efforts to hold to account both the individuals and the banks – wherever they may be in the world – who are engaging in unlawful conduct that deprives the US Treasury of billions of dollars of tax revenue”…

Mr Burderer’s further admission that assisting tax evasion was common practice in Switzerland has caused huge concern among the Swiss banking community, according to the BBC’s Switzerland correspondent, Imogen Foulkes.

“Some Swiss financial analysts are already speculating that Wegelin’s $58m fine, which many had expected to be higher, was kept low by the US authorities in return for Wegelin clearly implicating the rest of the Swiss banking community in tax evasion,” she said.

No one’s publishing anything more than speculation about which banks – and which bank officers – are next in line to be prosecuted. The obvious reason for the comparatively light fine and delay of indictments of Wegelin’s officers leads easily to the conclusion that cooperation and leads are being offered. It’s called turning state’s evidence to save your buns!

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