UBS is an abbrev**iation of the Union Bank of Switzerland

UBS is an abbrev**iation of the Union Bank of Switzerland

UBS is an abbrev**iation of the Union Bank of Switzerland, which is among the top financial organizations and biggest banks across the globe. This bank is known to deal with some of the wealthiest individuals that we have today and more convenient for those who like to travel across the word a lot or have many organizations that they deal with financially. The bank has had a share of setbacks that led to it almost collapsing. The bank was once found to have a fraud when America got hit by the mortgage market. The issue led to an investigation by the U.S. Department of Justice (DOJ).

Ethical breakdown

The bank failed to comply with the set laws and regulations as guided in the American soil. With a bank such as UBS, which operates internationally, it is a difficult task to follow every country’s laws where they work. They had to ensure that they monitor all illegal activities to maintain their standard levels of quality service. The investment bankers decided to conduct unethical activities so that they could raise more money and enrich the wealth management business, which was unethical. The managers wanted to get more bonuses, and the pressure from the bank made them want to engage in the high-risk activities. Due to the greed that they displayed, the majority of them were dismissed from their jobs.

Opportunities

The bank devised a scheme that they termed as tax-saving, and this was against the law in U.S. American citizens were able to register for accounts that listed them as non-American taxpayers’ bank accounts, and this was an opportunity that the bank utilized. Over 50,000 bank accounts were opened and discovered by the U.S. Department of Justice in their investigations. From these accounts, some revenues were generated and hidden so that they would not be taxed, and this led to the discovery of the fraud. It was discovered that the bank was able to earn over $20 billion before they were found. The bank had found an illegal opportunity and utilized it while they were breaking the laws.

Rationalization

The UBS bank took advantage of the fact that, in America, the laws have no clear guidelines that explain the requirements to be adhered to. The bank was required to be submitting reports that were timely and contained accurate information. However, they failed to present them and began to open accounts for American citizens. To make matters worse, the UBS bank had managed to keep the press as a secret to the extent that external auditors could not discover the fraud.

Financial impact

The UBS bank had continued to operate the illegal accounts for about a decade before they were discovered. During this time, the managers managed to keep it as a secret and continued to make more profits, and hence, they got more bonuses. The financial impact of this act saw a collection of more than $20 billion dollars in tax that did not go to the American government but to the bank. The greed of the bank caused it to be prosecuted, and people who were linked to the fraud. It was also fined $780 million.

Compliance

The bank developed risk management strategies that would help it identify and mitigate any gaps in fraudulent activities that would exist in the bank. The internal frauds that occurred in the bank served as a life lesson to the bank, and they would not want such a similar incident to happen in the near future. Other banks also learned from this incident at the UBS bank.

Social costs

Due to the improper actions that UBS took in the fraud, many people lost their jobs. Anyone who was linked to the greed for bonuses that saw the opening of accounts was dismissed with others being prosecuted. Many people lost confidence in the bank and shifted to other banks making UBS lose most of its customers. The bank incurred heavy losses that could have removed it from the list of the top banks in the world.