Nicola Sharp of business crime solicitors Rahman Ravelli says it is not the first such case – and is unlikely to be the last.
HSBC's Swiss private banking arm has agreed to pay nearly 300 million euros to settle a tax fraud case in Belgium.
The settlement comes six months after a French court ordered another Swiss lender, UBS, to pay 4.5 billion euros for illegally soliciting clients and laundering the proceeds of tax evasion. UBS is under investigation in Belgium for a similar case.
Swiss banks have been exposed to such legal challenges since 2004, when Bern agreed to apply a European Union tax on the savings income of its lenders' EU clients.
The Belgian prosecutors said in a statement that HSBC was "charged by a prosecutor in 2014 for serious and organised tax fraud, forgery and falsification of records, money-laundering and illegal use of financial intermediaries."
They alleged that HSBC helped and encouraged the avoidance of the EU savings tax by creating off-shore companies in Panama and other Caribbean tax havens for "no other purpose but to hide money". But the prosecutors have stated that HSBC had made significant changes to its working practices in order to tackle financial crime as a result of the allegations.
While noteworthy in its own right, the HSBC case is yet another example of the authorities cracking down on financial institutions in an attempt to do whatever is possible to combat financial crime.
It is the latest incident of the authorities forcing a financial institution to amend its policies and make genuine improvements to its practices and procedures; especially when it comes to due diligence, money laundering and the identification of the risks of financial crime. While this is not the first such incident, it would be very surprising if it turns out to be the last such case of a financial institution paying a penalty and being compelled to introduce change.
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