Wednesday

28th Sep 2022

HSBC bank 'helped clients dodge millions in taxes'

  • The bank reassured its clients that information on their accounts would not be shared with national authorities (Photo: Gyver Chang)

A Swiss subsidiary of British banking giant HSBC has given its clients advice how to avoid paying a tax on savings, according to a new investigation.

An international consortium of journalists on Sunday (8 February) published a collection of articles based on secret files under the title Swiss Leaks.

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The data was smuggled from HSBC bank by a former employee, Herve Falciani, and subsequently obtained by the French newspaper Le Monde.

The French paper shared the material with the International Consortium of Investigative Journalists, which in November 2014 published a trove of documents on Luxembourgian tax rulings dubbed Luxleaks.

According to the reports, the bank reassured its clients on several occasions that information on their accounts would not be shared with national authorities "even if evidence suggested that the accounts were undeclared to tax authorities in the client’s home country".

When in 2005 a new EU rule came into effect aimed at combating tax evasion, the bank's employees gave their clients tips on how to continue to avoid being taxed as a result of the new measure.

"HSBC profited from doing business with arms dealers who channelled mortar bombs to child soldiers in Africa, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws," according to the journalist consortium (ICIJ).

"I think they were a tax avoidance and tax evasion service. I think that's what they were offering," Richard Brooks, a former tax inspector, told the BBC.

The rule, the European Savings Directive, dealt only with individuals. So the bank advised clients on how to change the legal status of the account holder from an individual to a corporation, which was not covered by the directive.

A revision meant to close loopholes in the directive, should be transposed into national laws by January 2016.

In a statement, the bank acknowledged that between 2005 and 2007, the period during which the leaked documents were created, the Swiss subsidiary had “significantly lower” standards than today. The Swiss bank was acquired in 1999.

“We have taken significant steps over the past several years to implement reforms and exit clients who did not meet strict new HSBC standards, including those where we had concerns in relation to tax compliance”, the statement read.

HSBC wrote that it has had “a number of clients that may not have been fully compliant with their applicable tax obligations”.

“We acknowledge and are accountable for past compliance and control failures.”

HSBC offices raided as tax scandal deepens

Swiss prosecutors searched the offices of the Geneva subsidiary of UK banking giant HSBC bank on Wednesday as the inquiry into alleged money-laundering by the bank deepened.

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