February 27, 2017

Tax And Law Enforcement Agencies Investigate Against HSBC In Alleged Tax Fraud


Tax and law enforcement agencies in India and several other countries, including the US, France, and Belgium, conducted investigations against British bank HSBC (one of the largest banking and financial services organizations in the world) for alleged tax evasion, money laundering, and unlawful cross-border banking solicitation.

Disclosing the "tax-related investigations" in its latest annual report, the bank has set aside $773 million to deal with the financial impact of these investigations.

In its annual report, the bank stated that “Various tax administration, regulatory, and law enforcement authorities around the world, including in the US, France, Belgium, Argentina, and India, are conducting investigations and reviews of HSBC Private Bank (Suisse) SA (HSBC Swiss Private Bank) and other HSBC companies in connection with allegations of tax evasion or tax fraud, money laundering and unlawful crossborder banking solicitation.”

The bank further added that “As on December 31, 2016, HSBC has recognized a provision for these various matters in the amount of $773 million. There are many factors that may affect the range of outcomes, and the resulting financial impact, of these investigations and reviews. Due to uncertainties and limitations of these estimates, the ultimate penalties could differ significantly from the amount provided.”

In addition, the bank has been approached by the regulatory and law enforcement agencies of various countries for information on people and entities named in the leaked “Panama Papers,” which included hundreds of Indians indulged in alleged tax violations through offshore tax havens with the help of Panamanian law firm Mossack Fonseca.

Regarding the Panama Papers case, HSBC stated that "HSBC is cooperating with the relevant authorities. Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of this matter, including the timing or any possible impact on HSBC, which could be significant."

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