London-based banking giant HSBC last week said that it has been placed under a formal criminal investigation by French magistrates concerning allegations that its Swiss-based private banking arm helped clients evade taxes.
The investigation follows blockbuster revelations by the International Consortium of Investigative Journalists (ICIJ) that the bank’s private Swiss unit helped hide millions for clients, including arms dealers and dictators’ associates. As Compliance Week previously reported, the “Swiss Leaks” investigation revolved around a cache of leaked documents detailing accounts of more than $100 billion in 2006 and 2007, showing illegal tax evasion that benefited celebrities, executives, and figures tied to arms dealing, blood diamonds, and bribery. HSBC’s Swiss private banking unit also is facing criminal charges in Belgium.
On April 9, HSBC Holdings, the parent company of HSBC Group, said it was notified the day before that French magistrates not only have placed the bank under formal investigation, but also imposed a bail of US$1 billion.
In a statement, HSBC Holdings said it “believes the French magistrates’ decision is without legal basis, and the bail is unwarranted and excessive.” HSBC further said it “intends to appeal and will defend itself vigorously in any future proceedings.”