HSBC’s Swiss-based private banking arm has been accused by authorities in Belgium of helping rich Belgians dodge taxes in the latest of several tax-fraud probes aimed at the Swiss banking industry.
Private banking is a service many banks offer to wealthy individuals. It is much more personalized and tailor-made to the customer’s needs than normal retail banking.
Belgian investigating judge Michel Claise has charged HSBC Private Bank SA, based in Geneva, with serious and organized tax fraud, providing illegal financial services, and money laundering.
The British bank is alleged to have helped hundreds of clients, including wealthy Antwerp-based diamond dealers, shift their money to offshore tax havens.
HSBC Private Bank is one of many operating in Switzerland that has been under investigation for tax fraud.
According to Belgian prosecutors, HSBC’s actions resulted in the loss of tax revenue totaling hundreds of millions of euros.
As from 2005, EU individuals’ and companies’ income on overseas accounts were taxed at 15%. In 2011, the rate was increased to 35%.
In a statement, Belgian authorities said:
“The damage done to the Belgian state by the aforementioned deeds is estimated at several hundred million euros, to which should be added larger sums that could have been laundered and may be seized by the Belgian authorities.”
During the summer, HSBC had warned shareholders that such an allegation was likely and that the penalty could be considerable.
According to Belgian authorities “(HSBC is accused of) having knowingly eased and promoted fiscal fraud by making offshore companies available to certain privileged clients.”
The prosecutors added that these firms, based in the Virgin Islands and Panama, have just one purpose – to facilitate tax evasion.
Since 2003, Belgian authorities say more than 1,000 nationals have been involved in the fraudulent movement of several billions of dollars out of the country.
HSBC announced on Monday:
“HSBC Private Bank (Suisse) SA has been notified that it has been placed under formal investigation by a Belgian judge who, along with the French authorities, is examining whether the bank acted appropriately in the past in relation to certain clients who had Belgian tax reporting requirements.”
“Both the Belgian and French investigations have been notified in our filings previously and we will continue to cooperate to the fullest extent possible.”