Naming Names

The US and Swiss banking giant UBS have struck deal where American officials will get about 5,000 names of Swiss bank account owners, so that the IRS can start going after tax shelters and loopholes set up by these accounts.

The landmark deal, ending a dispute in which the U.S. tax authorities had sued UBS to disclose 52,000 U.S. clients suspected of tax evasion, dispels a big cloud hanging over the world's second-biggest wealth manager.

It also formally leaves Switzerland's cherished banking secrecy intact, although many Swiss private bankers say it has been badly damaged.

NZZ am Sonntag, citing its own researches and reports in the U.S. press, said the deal would be based on the existing U.S.-Swiss double taxation agreement of 1996, and therefore not require any changes to Swiss law.

As a result, the Swiss cabinet will be able to implement the deal directly, without going through parliament, it said. UBS will also escape having to pay a fine, it said.

The deal will probably be signed this week, a source familiar with the situation told Reuters on Friday.

A spokesman for the Swiss justice department declined to comment, noting that the two sides had agreed not to release details of the deal until it is signed. A spokesman for UBS also declined to comment.

5,000 is only a fraction of the 52,000 tax evaders out there, but it's more than the zero the IRS can do anything about now.

Still, you have to wonder how many Swiss accounts are going to be lost because of this. Tax evaders will simply find another country's banking system to use.