Swiss HSBC bank helped clients hide millions and evade taxes

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    An unprecedented amount of secret, incriminating files reveal how the division of HSBC bank in Switzerland actively assisted its wealthiest customers to hide millions of dollars in assets as well as advising them on how to avoid taxes. The files, which have had a WikiLeaks-type effect on the major financial institution, were obtained by a multi-country collaboration of media organizations including the British BBC and Guardian, French newspaper Le Monde and the US-headquartered International Consortium of Investigative Journalists.

    The leaked files, covering 30 bank accounts over a two-year period from 2005-2007, show that the bank consistently allowed major clients to withdraw suitcases full of cash and offered those same clients methods to avoid paying European taxes and hide bank accounts from tax authorities. Some of those clients were served despite the fact that they were known criminals or corrupt businesspeople. The accounts in question held over $120 billion dollars in total.

    The leak, the biggest of its kind in banking history, is sure to bring a major regulatory reaction from national governments, targeting tax havens and the wealthy individuals who take advantage of globalization in order to cheat tax authorities.

    HSBC is facing criminal charges in France, Belgium, Argentina and the US. The bank’s central office, in London, has admitted to wrongdoing on the part of its Swiss division, citing that, until now, it had been under reduced oversight. Governmental tax services across the globe have had access to the leaked information for the past four years, but only now has it been released for public consumption. The files in question include incriminating evidence involving all sorts of celebrities, public figures and shady businesspeople.

    Emmanuel Shallop, convicted of dealing in illegal African diamonds, is mentioned in a bank memo which states, “We have opened a company account for him based in Dubai … The client is currently being very careful because he is under pressure from the Belgian tax authorities who are investigating his activities in the field of diamond tax evasion.”

    Other clients who feature in the leaked documents include corrupt individuals implicated in corrupt business practices in Africa, including arms dealing and drug trafficking.

    Aside from merely allowing itself to become a grey area for hidden money, the bank actively promoted itself as a facilitator of tax evasion, marketing various “solutions” to clients, including methods for avoiding taxation. The European Union Savings Directive (EUSD), a law signed in 2003, established a new tax on Swiss savings accounts of EU citizens. The new rules basically allowed a country’s citizens to hold offshore accounts, as long as they were taxed a 15% “withholding tax” on the income from savings interest. HSBC Suisse, in response, devised a way by which its customer could effectively dodge the new tax by transferring their secret savings into a corporate account or that of a holding company, since the new rules only applied to individuals. These services were offered in return for very high fees, to be paid to the bank.

    In addition to the illegal maneuvering the bank was willing to do for clients, it would, as a matter of practice, dole out immense sums of cash to a client who walked into the bank.

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    Sean William Murray

    Sean W. Murray is the founder of Rich-Logic, a lean and very mean financial planning and investment advisory firm that advises clients with portfolios ranging from $10,000 to over $50 million. The author of "Beating Wallstreet", Murray advises wealthy individuals on how to invest their money, as well as courses on behavioral finance at dozens of elite institutes. His articles on TheMoneyExpert give valuable insights into the world of stocks, binary options, forex and other investment vehicles.

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