The six indictments in a Swiss-Singapore scheme show the tax crackdown is not over, raising questions as to who is next.

Swiss wealth managers view the tax crackdown as a never-ending nightmare. Although the issue had percolated under the surface for years, if not decades, it first really came to light in 2008 when UBS was forced to hand over client data as well as pay $780 million to settle a criminal probe for helping rich Americans hide their money in offshore accounts.

Thirteen years and more than $7.5 billion in overall industry penalties later, the indictment of six men in a U.S. district known for being particularly dogged about pursuing tax crimes make it clear that American prosecutors aren’t quite done with Switzerland. They intend to go after the people behind the schemes, not just firms.

Blindsided In the Balearics

Peter Rueegg, who had the highest profile of the individuals charged, was deputy CEO of a 3.14 billion Swiss franc ($3.38 billion) private bank in Zurich - until last week. The 61-year-old Swiss executive was blindsided by his arrest while vacationing in the Balearics, a person familiar with the matter told finews.com.

There was little reason for him to be so laissez-faire, even sanguine, about the risk of overseas travel. American prosecutors had made it clear when settling Ihag’s case six years ago that «those who circumvent offshore disclosure laws no longer have room to hide».

To have read this as only a warning for recalcitrant taxpayers is to ignore the fact that the U.S. hasn’t needed to scare-monger its own taxpayers for years. The Internal Revenue Service is swimming in damning evidence from wealth managers like UBS and the nearly 100 other Swiss banks that it either criminally charged or, like Ihag, corralled into non-prosecution agreements between 2013 and 2014.

Harbinger For Other Bankers

It also has voluntary disclosures from more than 50,000 of its own citizens made from years of tax amnesties. And, legislation such FATCA, which gives unprecedented and broad extraterritorial rights, only serves as icing on the cake for investigators.

In hindsight, the 2015 warning outlines the Justice Department’s intent to increasingly go after the bankers, accountants, structurers, consultants, and advisers like Rueegg who allegedly helped tax cheats, even if it takes the resource-strapped authorities years to do so.

The indictments of Ruegg, five other bankers, and Allied Financial – a firm long closely affiliated with Ihag – is a harbinger of what is to come for other Swiss players. The weighty evidence from an Ihag client, who returned 83 percent of the money Rueegg and the others had stowed for him in Singapore to U.S. coffers, cemented the case.

Switzerland Hard Done By?

The Swiss wealth industry often gripes it has been hard done by in the tax crackdown in comparison with other off-shore havens. In fact, the mountain of evidence gathered since 2008 simply points that it is still a central conduit for such activities. It remains the world’s largest offshore center and a Swiss bank features prominently in the U.S.’ biggest ever tax fraud case now being undertaken against software billionaire Robert Brockman.

A cursory look at the 84 non-prosecution agreements from 2013 and 2014 with Swiss banks reveals countless cases of very similar behavior as that seen at Ihag, though perhaps not as enterprising in its criminal intent, brazenly recorded and executed, or as slow to end.

Third Wave Of Escalation

Specifically, many Swiss banks are on record in the NPAs taking money from clients that UBS needed to say goodbye to when it was the first to come into U.S. crosshairs in 2007. Firms like Wegelin and Bank Frey learned painful lessons from trying to make a business of this.

The indictment of the six men fires the warning shot that represents a third wave of escalation towards Switzerland, with the criminal charges for 20 institutes including Pictet and UBS representing the first, and the wider Swiss industry settlements in 2013 being the second.

Bankers themselves, as Rueegg and his colleagues are now shocked to learn, are likely to be right in the middle of the third wave.