HSBC to Pay $192 Fine for Role in Tax Evasion
13 December 2019: The US Department of Justice (DOJ) has issued HSBC’s Swiss unit with a $192.4 million fine after it was found to have played a role in a global tax evasion scheme. The DOJ charged HSBC with conspiracy to defraud the United States insofar as, between 2000 and 2010, it assisted US clients in hiding offshore assets and income in Swiss-based accounts.
Following investigations, the DOJ found that bankers from HSBC would travel to various cities to scout for clients. They would then provide a platform through which their clients could effectively avoid paying tax. This continued over a period of 10 years, and even persisted as the authorities began their investigation.
The DOJ has agreed to defer prosecution for three years, and it will drop the charges in three years if the bank meets the terms of its deal. HSBC has said that it has cooperated fully with the relevant authorities and has removed the bankers that were involved. Chief executive, Alex Classen added “we have strengthened our compliance function, enhanced our control framework and put in place a comprehensive client tax transparency policy…today the Swiss subsidiary operates under new management.”
This action is the latest in a number of cases brought against Swiss-based banks and comes partly as a result of an increasingly tough stance from the US, which has encouraged Switzerland to be more transparent about offshore accounts held by foreigners in the country. The prosecution comes only days after the Bank of England warned HSBC that they are not doing enough to address conduct risks.