27th November 2017
There have been numerous cases lately of banks facing inquiries for their part in aiding tax evasion, with a particular focus on operations in Switzerland. In the latest such news, HSBC has agreed a settlement with French authorities which will see the bank hand over €300 million to end investigations.
French authorities probe HSBC
Inquiries into HSBC’s Swiss private bank began back in 2009 following the seizure of documents from a former employee of the bank, Hervé Falciani. In what he claims was an attempt to reveal tax evaders, the former IT specialist fled to France with information on thousands of HSBC clients. After Falciani fled Geneva, Swiss prosecutors requested French authorities search his home, at which point the data was discovered.
The information – dating between 2006 and 2007 – revealed that a number of French customers of HSBC’s Swiss private bank had invested in a scheme which enabled them to evade taxes, with €1.6 billion worth of assets tied up in this activity.
Swiss leaks fallout
This is just one of the investigations launched since the data caused public outcry in the 2015 Swiss Leaks, and it certainly looks like HSBC is feeling the impact of it’s involvement in this scheme. On top of this settlement in France, the bank is facing further investigations in the US and Belgium for similar activity. And while tax evasion is not a crime in Switzerland, HSBC has faced fines in the country for ‘organisational failings’ that allowed fraudulent activity to take place.
Reports suggest the bank is taking responsibility for its actions, though. In a statement, HSBC said it “has publicly acknowledged historical control weakness at the Swiss Private Bank on a number of occasions and has taken firm steps to address them”.
Cross-border investigations
While this investigation has been a long time in the making, it does demonstrate that authorities across borders are working together to prevent and prosecute fraudulent activity. With the bank facing investigations and fines across multiple locations, it’s certainly safe to say that that the potential financial impact – and, of course, the damage to its brand – could be extensive.
For recruiters operating with contractors overseas, these such examples should serve as a warning. If a financial institute with a wealth of expertise behind it is facing serious investigations for tax fraud, then no one can truly hide from the law.
The world of global tax and compliance is complex to say the least. And with pressure mounting on authorities to crackdown on fraudulent activity, the risks for international firms are only going to increase.
Speak to our team today to find out how we can help with your international contractor management solutions.
Live chat with one of our expert staff
Learn more about the latest tax and compliance news on our blog