Swiss prosecutors are investigating the country’s arm of HSBC for suspected money laundering as the scandal over the bank’s alleged tax avoidance schemes deepens.
A search has been ordered of HSBC Holdings PLC in Geneva as part of the inquiry into alleged “aggravated money-laundering” by the bank and persons unknown, NewsNow reported Wednesday.
“A search is currently underway in the premises of the bank, led by Attorney General Olivier Jornot and the prosecutor Yves Bertossa,” Geneva’s prosecutor said in a statement.
It said the investigation stemmed from “the recent published revelations” about the private bank, referring a report that it turned a blind eye to illegal activities of arms dealers and blood diamond traders while helping rich people avoid taxes.
Apology
A spokesperson for HSBC in Geneva declined to comment but the bank apologized at the weekend for past practices.
Adverts taken out in Sunday papers featured a letter in the name of chief executive Stuart Gulliver to the bank’s customers and staff, in which he insisted the Swiss bank had been “completely overhauled”.
“The media focus has been on historical events that show the standards to which we operate today were not universally in place,” he wrote.
“We must show we understand that the societies we serve expect more from us. We therefore offer our sincerest apologies.” But the bank chief asked that the claims be put “into context” and that people acknowledge that they had arisen from stolen data.
The Leak
The scandal started when former IT worker Herve Falciani leaked details about clients involved in the alleged tax avoidance.
Information handed to HM Revenue & Customs in 2010 identified 7,000 British clients with HSBC, 1,100 of whom had not paid their taxes.
Some £135 million ($208 million) in tax and penalties has since been recovered but only one prosecution has been brought.
HSBC has already faced allegations of fraud and money laundering from authorities in several countries including Belgium, where prosecutors accused its Swiss arm of having helped wealthy customers avoid tax.
A spokesperson for HSBC previously said the bank would cooperate with all investigations “to the fullest extent possible”.
In 2012, the bank agreed to pay $1.9 billion and enter into a five-year deferred-prosecution agreement to settle allegations including that it failed to catch at least $881 million in drug-trafficking proceeds laundered through its US arm and that its staff removed data from transactions with Libya and Sudan to evade American sanctions.
Another Investigation
France has toughened tax laws and Paris prosecutors investigate Switzerland’s largest lender UBS AG and London-based HSBC Holdings Plc over whether they helped clients hide wealth in Swiss accounts. Already bruised by battles with the US, Geneva bankers are pressing French clients to “regularize,” a polite way of saying they must come clean on undeclared funds. Failure to do so will result in account closings, clients were told.
France is investigating UBS after the country’s banking regulator fined the Swiss lender 10 million euros last year for deficient controls against tax fraud and illegal sales practices. Tax investigators searched the bank’s offices in Paris, Lyon and Strasbourg.
With HSBC’s private bank, which is suspected of helping 3,000 French customers avoid paying more than 4 billion euros of tax, investigating judges “clearly” want to bring charges, Le Monde said on June 10. The government built its case from a client list of leaked from the bank’s Geneva unit by a former software technician. HSBC declined to comment on the report.
