HSBC reveals ongoing tax evasion probe in India, US, France, others

Highlights:

1. Countries like US, France, Belgium, Argentina and India, are conducting investigations and reviews of HSBC Swiss Private Bank and other HSBC companies in connection with allegations of tax evasion or tax fraud, money laundering and unlawful cross-border banking solicitation

2. Indian tax authorities in February 2015 had issued a summons and request for information to an HSBC company in India 

3. In August and November 2015, HSBC companies received notices issued by two offices of the Indian tax authority alleging that the Indian tax authority had sufficient evidence to initiate prosecution against HSBC Swiss Private Bank and an HSBC company in Dubai for allegedly abetting tax evasion of four different Indian individuals and/or families 

London-headquartered international banking firm HongKong and Shanghai Banking Corporation (HSBC) has revealed ongoing probe carried out by Indian tax authorities and several other countries including its Swiss and Dubai units for allegedly abetting tax evasion of four Indians and their families, PTI news agency reported on Sunday. 

"Various tax administrations, regulatory and law enforcement authorities around the world, including in the US, France, Belgium, Argentina and India, are conducting investigations and reviews of HSBC Swiss Private Bank and other HSBC companies in connection with allegations of tax evasion or tax fraud, money laundering and unlawful cross-border banking solicitation," the news report said quoting HSBC, as stating in its latest annual report published last week. 

According to the report, HSBC disclosing the "tax-related investigations" in its annual report, further said it has set aside $773 million (nearly Rs 5,142.6 crore) as a provision for various tax- and money laundering-related matters.

Moreover, the bank has been approached by the regulatory and law enforcement agencies of various countries for information on persons and entities named in the leaked 'Panama Papers' -- which included hundreds of Indians who had indulged in alleged tax violations through offshore tax havens with the help of Panamanian law firm Mossack Fonseca, cited the report. 

"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," the report said citing HSBC as saying while adding that it is cooperating with the relevant authorities.

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Explaining case-wise details in its annual report, HSBC further said the Indian tax authorities in February 2015 had issued a summons and request for information to an HSBC company in India.

"In August 2015 and November 2015, HSBC companies received notices issued by two offices of the Indian tax authority alleging that the Indian tax authority had sufficient evidence to initiate prosecution against HSBC Swiss Private Bank and an HSBC company in Dubai for allegedly abetting tax evasion of four different Indian individuals and/or families and requesting that the HSBC companies show why such prosecution should not be initiated," HSBC said.

"HSBC Swiss Private Bank and the HSBC company in Dubai have responded to the show-cause notices," it said, but did not disclose the name of the Indian individuals.

HSBC first came into the Indian tax authorities scanner after a leaked list of hundreds of Indian clients of its Geneva branch found its way to the the country's tax authorities, which was followed by similar lists making their way to tax authorities in various other countries that prompted probes.

In recent years, the new government under prime minister Narendra Modi's leadership has stepped up its fight against black money, allegedly stashed in Switzerland,  and there have been apprehensions that the so-called illicit wealth might have got shifted to other places such as Dubai.

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The probe got widened after 'Panama Papers' -- another list of individuals and entities from across the world using offshore tax havens -- became public last year, cited the PTI report.

On Panama Papers case, HSBC said it has received requests for information from various regulatory and law enforcement authorities around the world concerning persons and entities believed to be linked to Mossack Fonseca and Co, a service provider of personal investment companies, the report said.

"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," it added.

Besides, revealing on its another long-running case, HSBC said it is continuing to cooperate in ongoing investigations by the Department of Justice (DoJ) and the Internal Revenue Service in the US regarding whether certain HSBC companies and employees, including those associated with HSBC Swiss Private Bank and an HSBC company in India, acted appropriately in relation to certain customers who had US tax reporting obligations.

"In connection with these investigations, HSBC Swiss Private Bank, with due regard for Swiss law, has produced records and other documents to the DoJ," the news report said citing the bank as saying.

"In August 2013, the DoJ informed HSBC Swiss Private Bank that it was not eligible for the 'Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks' since a formal investigation had previously been authorised," it said.

The British banking giant also said the US markets regulator the Securities and Exchange Commission (SEC) is investigating multiple financial institutions, including HSBC, in relation to hiring practices of candidates referred by or related to government officials or employees of state-owned enterprises in the Asia-Pacific.

"HSBC has received various requests for information and is cooperating with the SEC's investigation. 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," it said. 

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