HSBC Holdings PLC’s Swiss private banking arm has agreed to fork over nearly US$200 million in unpaid taxes, improper fees and fines after confessing to helping Americans evade federal taxes, the US Department of Justice announced on Tuesday.
“HSBC Switzerland conspired with US accountholders to conceal assets abroad and evade taxes that every American must pay,” Stuart Goldberg, acting chief of the department’s tax division, said in a statement.
“Banks, asset managers and other financial firms enable such crimes — and we will hold these institutions to account, right along with the taxpayers that use them to facilitate and disguise illegal activities,” he said.
Federal prosecutors say that for a decade starting in 2000, Geneva-based HSBC Private Bank helped US customers hide offshore assets from US authorities, using code-named and numbered accounts, hold-mail agreements and shell corporations in tax havens such as Panama, Liechtenstein and the British Virgin Islands.
In 2002, the bank had more than 720 undeclared US client relationships with a total value of more than US$800 million — five years later, this had reached almost US$1.3 billion, the justice department said.
Under the terms of a settlement, conspiracy charges filed against the bank will not prosecuted for a period of three years “to allow HSBC Switzerland to demonstrate good conduct.”
However, the settlement does not mean individuals will not be prosecuted separately, the statement said.
HSBC has agreed to pay US$60.6 million in unpaid taxes while forfeiting another US$71.9 million in fees earned on the undisclosed accounts, in addition to a US$59.9 million penalty.
US authorities have aggressively pursued Swiss banks for enabling tax evasion by Americans.
In 2009, UBS AG agreed to pay US$780 million to resolve allegations it had conspired to impede the work of the US Internal Revenue Service.
That resulted in the collection of US$6 billion in back taxes.
However, the justice department on Tuesday said that when the UBS investigation became public in 2008, HSBC Switzerland did not immediately cease business on behalf of US clients — helping some close their accounts in ways that kept the assets hidden, such was making withdrawals in cash.
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