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Wednesday, November 15, 2017, 12:57
HSBC settles French tax probe for about US$300m Euros
By Bloomberg
Wednesday, November 15, 2017, 12:57 By Bloomberg

A HSBC bank logo is seen on a sign outside a branch of the bank in London on Oct 22, 2015. (NIKLAS HALLE'N / AFP)

HSBC Holdings Plc will pay about 300 million euros (US$352 million) to settle a criminal investigation by the French government into allegations it helped clients evade taxes, the second-biggest corporate charge levied by an authority in the nation.

HSBC confessed past weaknesses in controls at the unit and said it had enhanced its anti-money laundering and tax compliance procedures

The bank acknowledged past weaknesses in controls at the Swiss private bank unit and said it had enhanced its anti-money laundering and tax compliance procedures, according to an emailed statement. HSBC, Europe’s largest lender, was under criminal investigation regarding the private bank’s conduct in 2006 and 2007. The agreement uses new rules in France that allow for a financial settlement to satisfy criminal claims.

The investigation found that HSBC helped its clients hide the assets they held in the firm’s Swiss private bank from local French tax authorities, the bank said. The agreement includes a penalty of about 158 million euros and damages and interest of about 142 million euros, a judge at a court hearing in Paris said.

France began scrutinizing HSBC’s Swiss private bank after Herve

Falciani, a former information technology worker at the firm, stole client account details from the Geneva office in 2008 and passed them to the French government.

HSBC was initially ordered by a French court to post a 1 billion-euro bail in 2015 to cover a potential penalty. That amount was reduced to 100 million euros later that year. The bank’s Swiss unit was put under formal investigation in France in 2014 and ordered to post bail of 50 million euros.

"HSBC is pleased to resolve this legacy investigation which relates to conduct that took place many years ago," the bank said. "HSBC has publicly acknowledged historical control weaknesses at the Swiss Private Bank on a number of occasions and has taken firm steps to address them."

In a similar case, UBS Group AG and its French unit were ordered in March to stand trial for tax fraud after settlement talks broke down over the size of the penalty. That may leave the Zurich-based bank open to a fine of as much as 4.9 billion euros in court.

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