Aug 19, 2009, 14:22 GMT
Geneva - Switzerland and the United States signed Wednesday a deal on the ongoing lawsuit against UBS, in which Washington demanded data on clients who, it claimed, evaded paying their taxes, the government in Bern announced.
Data on some 4,450 account details could be handed over to Washington within one year, an amount much smaller than the US originally wanted. In return, the US would cease all unilateral measures to obtain information on clients of the Swiss bank.
The exact mechanism of the hand over, which would involve the US requesting administrative assistance from Switzerland to find those guilty of fraud, would be laid out in an annex to the agreement to be made public in 90 days.
Objections would likely be made by the clients before their details were handed over, and could see court cases opened on the affair.
Eveline Widmer-Schlumpf, the Swiss justice minister, said the deal with Washington would lead to an end to the existing tension between the two governments and close the 'conflict of sovereignty.'
The deal would see a pause in the case pending against UBS in the Miami, Florida, court, until the data reached the US government.
UBS's case is part of a larger crackdown the US and other governments are waging against wealthy individuals who evade paying their taxes by committing fraud.
The US filed a suit earlier this year demanding UBS hand over information on 52,000 clients, while the Swiss government said the Alpine country's banking secrecy laws prevented the bank from delivering the data.
UBS took a back seat as the two governments worked out a deal.
The Swiss banking giant in February admitted wrongdoing, saying its employees had helped clients willfully evade paying their taxes. It agreed to pay a fine of 780 million dollars and hand over data on some 250 clients who committed tax fraud.
The US then slapped the bank with a new suit for the 52,000 clients.
As clients in the US come clean to the taxman under an amnesty deal, they have admitted to holding undisclosed accounts in numerous banks in Europe, including several in Switzerland, though that does not necessarily mean the financial institutions acted illegally.
Bern is also in the process of renegotiating its double-taxation agreements to better comply with the Organization for Economic Cooperation and Development's tax fraud articles.
A close to the UBS saga would bode well for the bank, analysts have said, noting that it would allow the Zurich-institution to stop the massive outflows of capital the uncertainty has created.
The Swiss government has about 6 billion dollar stake in UBS, after bailing out the bank last year. It is expected to begin moving out of the investment once the tax issue is resolved and it can turn a profit.
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