UBS drops U.S. client offshore-banking

WASHINGTON, July 17 (UPI) -- Swiss bank UBS said Thursday it will stop offering offshore-banking services to U.S. clients after a threat to its U.S. banking privileges.

With the bank facing a federal investigation into its practices, a top UBS official used his opening statement at a Senate subcommittee hearing in Washington Thursday to announce the bank's new policy, The New York Times reported.

"We have decided to exit entirely the business in question," Mark Branson, chief financial officer of UBS' global wealth-management unit, said.

The Senate Permanent Subcommittee on Investigations estimated foreign banks help wealthy Americans conceal $100 billion annually from the Internal Revenue Service. Subcommittee Chairman Sen. Carl Levin, D-Mich., released details Thursday of how foreign banks allegedly help clients dodge taxes by shredding documents, smuggling and using code names.

Levin said UBS needed to "clean up their act."

"I don't think that any bank that goes to the extent that UBS has gone through to avoid doing what their agreements with the United States require them to do, should be allowed to continue to do business unless they clean up their act," Levin told ABC News.

"Top executives of these banks had to not only be aware of these practices but had to have approved these practices," Levin said.

Branson apologized to lawmakers for compliance failures and said the decision to get out of the cross-border business was meant to prevent future such lapses, the Times said.

UBS deposits include 17.9 billion unreported dollars from 19,000 U.S. customers, the report says.

Bradley Birkenfeld, a former UBS employee, pleaded guilty in June to helping Igor Olenicoff, a California billionaire, allegedly hide $7.2 million from the Internal Revenue Service.