HSBC has confirmed it is subject to an ongoing investigation by US authorities into allegations of tax avoidance by some US-based clients as a result of cross-border business conducted through the bank’s Swiss operations.
HSBC confirmed to FTAdviser that it is one of 11 banks whose Swiss operations are being investigated by US regulators, as a part of a wider prove into practices within international banking groups’ Swiss banking units.
According to an article published in the Daily Mail, other banks that are being investigated include Credit Suisse, Julius Baer and Zuercher Kantonalbank.
A spokesperson for the bank said that it is “too early” to say what or when the outcome will be but they did confirm that it has passed on documents relating to transactions within its Swiss business.
The spokesperson was keen to emphasise that names of clients have been blacked out due to strict Swiss secrecy laws.
This is the latest regulatory probe in the US to hit the embattled banking group, following recent furore over alleged failings in relation to money laundering controls that allowed the bank to be used for terrorist financing.
The bank last month apologised to a US senate sub-committee over the failings and its chief compliance officer David Bagley stepped down from his position.
In the bank’s interim report, published on the London Stock Exchange earlier this month, HSBC group chairman Douglas Flint said the bank’s recent failings were “extremely frustrating and infuriating” and promised deep structural and cultural changes to address any issues.
In its annual results in April 2012, HSBC revealed that it’s US division received a subpoena from the SEC directing it to produce records in the US related to, among other things, its Swiss private banking unit’s cross-border policies and adherence to US broker-dealer rules.
Switzerland has long been used as a tax haven by the rich because of its stringent secrecy laws and generous tax regime.
Last year, HM Revenue & Customs begun criminal and fraud investigations against more than 500 individuals and organisations holding HSBC accounts in Geneva.
A spokeperson for HSBC said: “HSBC is one of 11 banks that are being investigated by US authorities. They are investigating how we do cross border business with US-based clients.
“They asked 11 banks with Swiss operations to submit information to give them insight as to how we do business with US-based citizens.”
