HSBC's Swiss private banking arm has agreed to pay US$192 million to the US Justice Department after admitting helping individuals and corporations evade federal taxes.
Federal prosecutors say the Geneva-based HSBC Private Bank helped US customers hide offshore assets from the authorities for years, using codenames and numbered accounts and shell corporations in tax havens like Panama, Liechtenstein and the British Virgin Islands.
They said the racket was so successful the value of assets being hidden rose from $800 million in 2002 to $1.3 billion in 2007.
— Mr Ethical (@nw_nicholas) December 11, 2019
Stuart Goldberg, acting chief of the department's tax division, said: "HSBC Switzerland conspired with US account holders to conceal assets abroad and evade taxes that every American must pay. Banks, asset managers and other financial firms enable such crimes - and we will hold these institutions to account, right along with the taxpayers that use them to facilitate and disguise illegal activities."
— Alex (Sasha) Krainer (@NakedHedgie) December 11, 2019
The bank could still face conspiracy charges unless it can “demonstrate good conduct” for three years and the individuals involved could be prosecuted separately.
HSBC has agreed to pay $60.6 million in unpaid taxes, is forfeiting $71.9 million in fees and is paying a fine of $59.9 million.
— Mark Mitchell (@mgcmitchell) December 5, 2019
In 2015 the former head of HSBC’s private banking division, Chris Meares, told a committee of MPs he did not know what his staff in Geneva “were up to”.
The chair of the Public Accounts Committee, Margaret Hodge, said: "Either you're completely incompetent in your oversight duties or you knew about it.”
The revelations about HSBC’s Swiss private banking arm are the latest in a long list of scandals involving the bank.
In 2012 HSBC paid a fine of US$1.9 billion after their Mexican business laundered US$881 million for two of Latin American’s biggest drug cartels.
HSBC was also implicated in the Libor and Euribor rate scandals and in 2016 two HSBC executives were charged over a $3.5 billion foreign currency scheme which allegedly defrauded the bank’s customers.