Swiss Banking Secrets From the Mouth of the UBS Whistleblower

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In 2007, Bradley Birkenfeld, a Boston-born bank director for UBS in Geneva, boarded a plane back to the states with a gym bag full of incriminating documents. His goal: exposing his employer's massive tax-evasion schemes to the U.S. Department of Justice, including heavily guarded secrets like the Swiss bank's system for linking anonymous account numbers with clients' names. Birkenfeld's intel eventually helped bring down the bank's U.S. cross-border banking division, leading to an agreement to turn over thousands of names to the IRS. Birkenfeld saw himself as a hero, but in a last-minute courtroom switch, the DOJ wanted to put him away for three years for "plotting a complex fraud even while cooperating with government prosecutors." On the eve of serving his sentence, Birkenfeld sat down with the Global Post for a massive, five-part interview — and attempt at redemption.

On linking client names to account numbers:


At UBS, clients’ names and their account information are divided irreconcilably between separate computer servers in secret locations. . . At the start of business each morning, private bankers like Birkenfeld, then a director in the wealth management division of UBS, would check in at combination vaults to pull their "racks" — wooden trays of 4x5 paper index cards that are the Achilles heel of Swiss secrecy. Printed on each confidential client card — in plain, unencrypted typeset — is the client’s name, account and safety deposit box numbers, the fees paid, and home addresses and unique passwords — secret challenge phrases known only to the banker and the client that are used to verify identity on the phone (“Rose and Eagle” on a surreptitiously photocopied card Birkenfeld showed me).

On recruiting, which often happened at UBS-sponsored millionaire magnet events like a Newport yacht race, Art Basel, car shows, and tennis tournaments:

There was a lot of wink and nod, as Birkenfeld described it: a quiet solicitation on the sidelines, a dinner later, a discreet product presentation called up on an encrypted company laptop. “These were very sophisticated marketing VIP events,” Birkenfeld said (his favorite was a $10,000-a-seat evening with Elton John at the Waldorf Astoria in April 2005). They were also illegal . . .Birkenfeld preferred his hunting even further afield. With an expense account and ticket to ride, business was pleasure when he hit on prospective clients. "I’d say, 'Do you want to go to Wimbledon, have lunch and see the match? Do you want to come to Oktoberfest and drink some beer and look at hot girls? Whatever you want to do.'

Telling Swiss Secrets: A Banker's Betrayal [Global Post via Business Insider]