Swiss bank Wegelin has announced it will close after being hit with a fine from the US authorities. We answer five questions on Wegelin’s closure.
Why is Wegelin closing?
The Swiss bank, which was established 35 years before the US declaration of independence, is closing after pleading guilty to charges brought against it by a New York court which has resulted in the bank being hit with a $57.8m (£36m; 44m euros) fine by the US authorities.
It has announced that once the fine is settled the bank will close permanently.
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What charges did Weglin plead guilty to?
The bank pleaded guilty to allowing more than 100 American citizens hide $1.2bn from the Internal Revenue Service for almost 10 years.
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Originally, the bank said it would fight the charges, declaring that because it only held branches in Switzerland it could be bound only by Swiss laws.
What is the bank’s history?
Weglin was established in 1741 and resides in a small town called St Gallen in Switzerland with further offices in Zurich, Bern, Basel, Geneva, Lausanne, Locarno, Lugano, Chiasso, Schaffhausen, Winterhur, Chur and Lucerne.
It is the first foreign bank to plead guilty to tax evasion in the US.
What have American officials said?
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.”
Adding: “[This is 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”.
Are other Swiss banks being accused of the same conduct?
Four years ago UBS was accused by the US authorities of tax evasion related charges. Although UBS never pleaded guilty to the charges it did pay the US government a $780m fine in what is known as a “deferred prosecution agreement” whereby a fine is paid and the charges are then dropped. UBS also agreed to reveal US account holder details.
Credit Suisse, another big Swiss bank, also remains under investigation by the US authorities.
It is unknown whether the US authorities will continue with or drop other charges against three Wegelin bankers, Michael Berlinka, Urs Frei and Roger Keller.