HSBC, a familiar name in banking on an international scale, has helped clients to collectively avoid hundreds of millions in tax according to a joint investigation by media outlets around the world. The investigators have seen details of accounts representing a large number of the bank’s clients in order to substantiate the allegation.
The data examined by the consortium of media outlets was leaked in 2007 by a whistleblower. It contains details of accounts belonging to 106,000 HSBC clients. Overall, the data covers clients in 203 different countries, including 7,000 in the UK. After its release, it was passed on to more than 50 media outlets including the Guardian and the BBC’s investigative programme Panorama.
The bank will now be the subject of criminal investigations in France, Belgium, the US and Argentina. It currently faces no investigations in the UK, where the bank is based. According to a statement, HSBC will be “co-operating with relevant authorities” while such investigations are ongoing.
In regard to the nature of the accusations, HSBC admits in a statement that some of its clients have been aided in tax avoidance by HSBC’s policies. Specifically, the bank admits that secrecy policies have been taken advantage of by certain clients in order to hold accounts that were not declared for tax purposes. However, the bank insists that since this took place, it has “fundamentally changed.”
However, HSBC is accused of more than just passively implementing secrecy policies that aided tax avoiders. After the 2005 introduction of the European Savings Directive, designed to allow Swiss banks to take money directly from undeclared accounts on the taxman’s behalf, HSBC wrote to customers offering ways around the new measures. This is just one of a number of ways in which the bank is accused of taking a more active role in assisting with tax avoidance.
Neither the holding of offshore accounts nor the avoidance of tax is necessarily illegal. However, deliberately hiding money in order to avoid paying tax that is rightfully due is an illegal practice, and offshore accounts are frequently used as a means to achieve this.
In 2013, the authorities in France concluded an examination of the data released by the whistleblower. They decided that almost all (around 99.8%) of French citizens featured in the data were probably involved in tax evasion. Meanwhile in India, finance minister Arun Jaitley has said that investigations will be launched into all Indian citizens featured on the list. Jaitley did, however, warn that the list may also contain legitimate accounts.
As well as to the various media outlets and journalistic bodies that have been analysing and investigating the list, the leaked data has also been in the hands of HMRC since 2010. However, though the data seems to identify over 1,100 who have evaded tax that they legally owe. However, only one prosecution has so far been made.