New information regarding HSBC Holdings PLC’s (HSBC) history of aiding tax evaders has been released by ex-employee Hervé Falciani to a number of media outlet, as well as the International Consortium of Investigative Journalists. The data alleges that the bank kept secret accounts for a number of wealthy, celebrity, and/or unsavory individuals, including “dictators and arms dealers,” as well as clients that are on U.S. sanctions lists. HSBC also purportedly would advise clients on how to get around paying taxes in their home countries.
Falciani, an HSBC computer analyst who calls himself a whistleblower, has provided what the BBC is calling the largest data leak in the history of banking. He started sending information out in 2008, copying files onto personal storage devices. The information was sent to French Finance Minister Christine Lagarde, who now runs the International Monetary Fund. She notified other governments.
Falciani claims that in 2006,he notified his superiors at HSBC that there were flaws in data storage that could hurt client confidentiality. He said that no one paid attention. Bank officials, however, counter that Falciani issued no such warnings.
While critics claim that he stole the HSBC data while working at the bank, as well as originally tried to sell the information first, Falciani denies those allegations. Now, he is warning that more revelations will be coming. Meantime, HSBC issued a statement last week noting that since 2008 the bank has worked hard to stop its services from being used for money laundering and tax evasion.
In 2011, the bank agreed to pay $1.92 billion to Ustpstoc.S. authorities to resolve money laundering claims—That’s $655 million in civil penalties and $1.25 billion in forfeiture.
HSBC is one of about a dozen Swiss lenders that the DOJ is looking into for allegedly helping Americans avoid paying taxes through undeclared accounts. In 2014, Credit Suisse Group (CS) paid $2.6 billion and pleaded guilty to a criminal charge of conspiring to aid tax evasion. In 2009, UBS AG (UBS) managed to avoid prosecution by consenting to pay $780M and giving the names of U.S. account holders to the American government.
HSBC Hit by Fresh Details of Tax Evasion Claims, The Wall Street Journal, February 9, 2015
HSBC to pay $1.92 billion in US money laundering case, France24, December 11, 2012
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HSBC Securities to Pay $375K to Settle FINRA Allegations that It Recommended Unsuitable Collateralized Mortgage Obligations to Retail Clients, Stockbroker Fraud Blog, August 25, 2010
UBS Under Scrutiny in New Tax Evasion Probe, Institutional Investor Securities Blog, February 4, 2015