Hong Kong and Shanghai Banking Corporation (HSBC) has revealed that it is under investigation in India and a few other countries for helping customers evade tax.
The bank, in its annual report released last Tuesday, said tax authorities in countries such as the US, France, Belgium, Argentina, and India are reviewing the conduct of HSBC Swiss Private Bank and other HSBC arms over allegations of “tax fraud, money laundering and unlawful cross-border banking solicitation”.
It divulged that the Indian tax authorities had issued show cause notices in August and November 2015 to HSBC. They had alleged that evidence showed HSBC Swiss Private Bank and an HSBC company in Dubai were helping four Indian individuals and/or families to dodge tax payments.
It is believed that HSBC may have subverted certain rules and allowed certain persons to open private banking accounts overseas. The Income Tax Department in India received a leaked list of several Indian clients in the HSBC Geneva branch around the same time when many other countries also got similar lists.
HSBC also said that many authorities around the globe have requested data regarding persons involved with Mossack Fonseca & Co., a law firm in Panama. Mossack Fonseca was revealed to have been providing tax evasion opportunities to people around the world, including a large number of Indians. Known now as Panama Papers, around 11.5 million documents belonging to Mossack Fonseca, containing personal information about individuals and entities, were leaked in 2015.
HSBC also gave details of the probes conducted on it by authorities in Belgium, France, Argentina and the US. The bank said it is “co-operating with the relevant authorities” and has reserved US$773 million from its coffers for dealing with the consequences of the case.
HSBC also expressed concern that other countries might also start tax probes against it after the news of current investigations spreads.