Swiss banking giant UBS has agreed to pay $780m and identify certain US customers in a deal to resolve criminal fraud charges that it assisted rich American clients evade taxes, the US Justice Department said.

It said that Switzerland's largest bank has entered into what is known as a deferred prosecution agreement on charges of conspiring to defraud the US by impeding the US tax collection agency, the Internal Revenue Service.

Department officials said the agreement was unprecedented in pulling aside Switzerland's much-vaunted tradition of bank secrecy and described it as one of the biggest settlements ever.

They said UBS admitted to helping US taxpayers hide accounts from the IRS. The UBS charges and agreement represented the latest court developments in a long-running, high-profile investigation.

In January, the former head of UBS's wealth management business, Raoul Weil, was formally declared a fugitive after failing to surrender to US authorities on charges of conspiring to help wealthy Americans hide assets from US tax authorities.

The deal comes a week before a US Senate hearing aimed at pressuring UBS to give more information about Americans who use Swiss bank accounts to avoid paying taxes.

UBS acknowledged that it helped US taxpayers open accounts that concealed their identities from the IRS, the department said. It said about 17,000 of 20,000 US cross-border clients concealed their identities and the existence of their accounts, with $20 billion in assets, from the IRS.

In an unprecedented move, UBS, under orders from Swiss market regulators, agreed to immediately provide the US government with the identities of, and account information for, certain US customers, the department said.

UBS has also agreed to quickly exit the business of providing banking services to US clients with undeclared accounts, it said.

The agreement called for UBS to pay a total of $780m in fines, penalties, interest and restitution, the department said.

From 1999 until last year, UBS acted as an unregistered broker-dealer and investment adviser to thousands of US clients and offshore entities with US citizens as beneficial owners, the SEC said.