Skip to Main Content

Scott Michel Quoted in Reuters, Swiss Case Lifts Curtain on Correspondent Banking

January 6, 2012, Reuters
Excerpt taken from article.

The indictment of three Swiss bankers employed by Switzerland's oldest private bank sheds light on an obscure corner of hidden offshore wealth: the relationships some smaller banks have with bigger banks for moving clients' money around the world.

These inter-bank ties are increasingly important to a U.S. crackdown on Swiss banks suspected of enabling tax evasion for wealthy Americans, said persons briefed on the matter.

The Swiss bankers, indicted on Tuesday, work for Wegelin & Co, a boutique private bank based in St. Gallen, Switzerland with no U.S. offices.

The three were charged with conspiracy and fraud for enabling dozens of wealthy Americans to evade taxes on $1.2 billion in hidden assets over 2006 through 2010, in part by shifting some of the money through the Connecticut branch of UBS AG, the Swiss banking giant.

UBS was not faulted in the indictment for the shifting, which took place through a relationship common in the banking world and known as 'correspondent banking.'

Details in the indictment of the shifting signal that U.S. authorities are increasingly probing correspondent banking relationships, according to persons briefed on the matter and to tax lawyers who have read the charges.

Authorities are probing Swiss banks and Swiss-style banks suspected of selling tax evasion services to tens of thousands of wealthy Americans in recent years. Eleven of those banks - including Wegelin, Credit Suisse and regional Basler Kantonalbank - are under criminal investigation.

The rest of the Swiss banking industry is attempting to hammer out a civil settlement with the tax-collecting U.S. Internal Revenue Service (IRS) covering any wrongdoing.


The wide probe is an outgrowth of scrutiny of UBS, which ended in 2009 when the bank reached a deferred prosecution agreement with the Justice Department. UBS admitted to criminal wrongdoing and paid a $780 million fine for selling tax evasion services to Americans through its private bank.

The agreement expired in 2010, when UBS met its requirements to dismantle its offshore undeclared banking for Americans and strengthen its internal procedures oversight.

A person briefed on the matter said U.S. prosecutors and IRS criminal investigators were scrutinizing correspondent banking relationships of some Swiss banks, including Wegelin and cantonal, or regional, banks.

Investigators, this person said, were interviewing taxpayers over whether the correspondent banks, including UBS, "directed" former clients of their own banks to the smaller banks for which they still provide correspondent services.

The scrutiny, this person said, was ultimately aimed at building evidence not against the correspondent banks, but against their clients, the smaller Swiss banks.

"The indictment's focus on the role of correspondent banking gives us insight into how prosecutors are going to put these things together," said Scott Michel, a tax lawyer at the firm of Caplin & Drysdale in Washington, D.C.

Click here to read the article on the U.S. crackdown of Swiss banks who enable wealthy Americans to evade taxes.


About Caplin & Drysdale
Celebrating our 55th Anniversary in 2019, Caplin & Drysdale continues to be a leading provider of legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills -- combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment -- make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:
For more information, please visit us at
Washington, DC Office:
One Thomas Circle NW
Suite 1100
Washington, DC 20005
New York, NY Office:
295 Madison Avenue
12th Floor
New York, NY 10017


This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.
©2022 Caplin & Drysdale, Chartered
All Rights Reserved.

Related Professionals

Related Practice Area(s)