The Swiss branch of HSBC's private bank has been fined almost CHF200 million by the US Department of Justice (DoJ) for having helped American clients evade tax between 2000 and 2010.This content was published on December 11, 2019 - 16:08
HSBC’s Swiss private banking unit confirmed the $192.35 million (CHF189.6 million) fine handed down by a district court in Florida on Tuesday.
The bank admitted to holding $1.26 billion in undeclared assets for wealthy American clients over the period 2000-2010. To help them evade tax, it devised fraudulent strategies and presented false documents to US tax authorities, the DoJ said in a statement on Tuesday.
“In 2002, the bank had approximately 720 undeclared U.S. client relationships, with an aggregate value of more than $800 million. When the bank’s undeclared assets under management reached their peak in 2007, HSBC Switzerland held approximately $1.26 billion in undeclared assets for U.S. clients," the justice department said.
HSBC said it had proactively contacted the DOJ a number of years before the U.S.-Swiss Bank Program was announced in 2013 and self-reported its past activities. It said it had cooperated extensively with US authorities, in compliance with Swiss law, to bring this investigation to a close.
“We are pleased to resolve this legacy matter. Over the past decade we have strengthened our compliance function, enhanced our control framework and put in place a comprehensive client tax transparency policy,” said Alex Classen, CEO of HSBC Private Bank (Suisse) SA in a statement.
“Today the Swiss subsidiary operates under new management and is focused on a smaller set of markets and clients. Based on this strong foundation, and as the longstanding U.S. investigation comes to a close, HSBC’s Swiss subsidiary is fully focused on growing its business in a sustainable way.
Beyond the fine, HSBC has also pledged to give US authorities information about accounts that were closed between 2009 and the end of 2017.
The fines are part of a long-running series of legal actions against Swiss banks that helped US clients to evade tax: for example, Credit Suisse previously paid $2.6 billion, Julius Bär $547 million, the Zurich Cantonal Bank $98.5 million, and the Basel Cantonal Bank $60.4 million.
However, HSBC is one of the last remaining so-called 'category 1' banks to have its case settled by US authorities. Geneva-based private bank Pictet and Zurich-based Rahn+Bodmer are still awaiting a conclusion.
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