U.S. Sets up a Showdown with Singapore – UBS Held as a Hostage

Singapore

The U.S. hunt on suspected tax evaders has reached Singapore, as the Internal Revenue Service has asked a federal judge in Miami to force Swiss bank UBS to hand over documents on an account in Singapore held by a U.S. citizen of Chinese origin.  

The Internal Revenue Service (IRS) asked a U.S. judge to force UBS to produce documents on Ching-Ye Hsiaw, who lives in China. The judge on Wednesday told UBS to show up in court on March 31 to explain why it has refused to supply the account records, according to a report by news agency «Bloomberg» on Friday.

«They’re holding UBS hostage in the U.S. by saying you subjected yourself to U.S. jurisdiction, now produce these records outside the U.S.,» said Jeff Neiman, a former federal prosecutor to «Bloomberg». «It’s setting up a showdown of Singapore secrecy versus the U.S. need to enforce its tax laws.»

At the largest Swiss Bank UBS no one wanted to comment on the matter. According to «Bloomberg» Hsiaw couldn’t be reached for a statement.

Keeping an Impeccable Image

The action initiated by the IRS is a reminder of the actions the U.S. started some years ago to fight offshore tax evasion especially to Switzerland. to date more than 80 Swiss banks, including UBS and Credit Suisse, have agreed to pay a total of $5 billion or so in fines.

The Hsiaw case comes up at a rather crucial time for Singapore as the city-state puts a huge importance in having an impeccable image as a financial centre. At the same time a scandal involving Malaysia's sovereign fund 1MDB has already put a lot of pressure on the country. Therefore Singapore might be very accommodating in this case.

Getting Singapore

An IRS revenue agent said to «Bloomberg»: «Even if Singapore’s bank secrecy laws, as UBS contends, precludes disclosure of the summoned bank records relating or pertaining to Hsiaw’s Singapore account(s), international comity requires that the records be disclosed.»

Neiman, the former prosecutor, said that «UBS can be held in contempt if they don’t produce the records. I think it’s the IRS’s way to start getting at Singapore.»

  • The case is U.S. v. UBS, 16-mc-20653, U.S. District Court, Southern District of Florida (Miami).

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