Federal prosecutors on Thursday made the announcement of the indictment in Manhattan. It is the first time that the US has indicted an overseas bank in abetting tax fraud by US taxpayers. In its indictment, the Justice Department said that more than $16 million had been seized from Wegelin’s correspondent bank, UBS AG, in Stamford, Connecticut through a separate forfeiture complaint. Wegelin uses correspondent banking services for handling money for US clients because it has no branches outside Switzerland. 

 

Earlier, UBS was involved in a similar fraud and conspiracy for helping scores of Americans to evade taxes through its private bank. It had paid $780 million and entered into a deferred prosecution agreement with the Justice Department over the charges in 2009. UBS also provided identities of more than 4,500 clients. The indictment of Wegelin increases the pressure on 10 other Swiss banks which are under investigation of the Justice Department. Moreover, it is a blow to the Swiss bank secrecy tradition. Wegelin sold it non-U.S. portion of its business just six days ago.