Leaked Files Show HSBC Helped Clients With Tax Dodges

The Swiss private banking arm of HSBC abetted wealthy clients looking to avoid taxes on more than $100 billion, documents show.
Matthew HellerFebruary 10, 2015
Leaked Files Show HSBC Helped Clients With Tax Dodges

The Swiss subsidiary of global banking giant HSBC helped wealthy clients hide hundreds of millions of dollars from tax authorities, according to leaked files obtained and analyzed by the International Consortium of Investigative Journalists.

Providing what the ICIJ called “a rare glimpse inside the super-secret Swiss banking system,” the documents relate to accounts holding more than $100 billion and associated with more than 100,000 individuals and legal entities from more than 200 nations. They were turned over to French authorities by a former HSBC employee in 2008 and provided to the ICIJ by the French newspaper Le Monde.

According to the consortium, the data show HSBC Private Bank (Suisse) “repeatedly reassured clients that it would not disclose details of accounts to national authorities, even if evidence suggested that the accounts were undeclared to tax authorities in the client’s home country.”

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In addition, the ICIJ said in a report published Sunday, bank employees discussed with clients “a range of measures that would ultimately allow clients to avoid paying taxes in their home countries.” These measures included circumventing the European Savings Directive, a 2005 Europe-wide rule aimed at tackling tax evasion through the exchange of bank information.

“[T]he ESD pertained only to individuals, not to corporations,” the report said. “The files show HSBC Private Bank seized on this loophole to market products that transformed individuals into corporations for tax-reporting purposes.”

The ICIJ also found that almost 2,000 of HSBC clients who appear in the files are associated with the diamond industry and that the bank “served those close” to regimes including those of former Egyptian President Hosni Mubarak and current Syrian ruler Bashar al-Assad.

In a response to the report, HSBC acknowledged that “the compliance culture and standards of due diligence in HSBC’s Swiss private bank, as well as the industry in general, were significantly lower than they are today.”

HSBC Private Bank has “undergone a radical transformation in recent years,” it said, and HSBC “has taken significant steps … 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.”

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