HSBC Holdings admitted that it helped hundreds of American clients hide more than $1 billion in assets from the Internal Revenue Service and agreed to pay $192.4 million to resolve a decade-long US tax investigation, reported Bloomberg.
Prosecutors filed a charge of conspiracy to defraud the US against a unit of the bank, HSBC Private Bank (Suisse), but agreed to drop it in three years if it abides by a deal submitted in federal court in Fort Lauderdale, Florida.
According to the conspiracy charge from at least 2000 through 2010, HSBC Switzerland assisted US persons in concealing their offshore assets and income from US tax authorities, evading their US tax obligations and filing false federal tax returns with the IRS.
The settlement follows years of Justice Department and IRS battles against Swiss banks, taxpayers and enablers over undeclared accounts, which led to settlements with dozens of banks. It also caps a decade in which HSBC, an Asia-focused lender, entered into two other deferred-prosecution agreements with the US and spent heavily on improving internal controls.
Stuart M. Goldberg, the acting Deputy Assistant Attorney General in the Justice Department’s Tax Division, said, “HSBC Switzerland conspired with US account holders to conceal assets abroad and evade taxes that every American must pay.”
HSBC Switzerland admitted that it helped 720 US clients hide $825 million in assets from the IRS. The amount of undeclared assets rose to $1.26 billion in 2007, before dropping by half three years later.
The lender offered a variety of traditional Swiss banking services that helped clients cheat the IRS, including advising clients to withdraw less than $10,000 to avoid reporting requirements and providing credit, debit and travel cards to access funds.
Many banks have made similar admissions. UBS Group said in 2009 that it helped thousands of clients cheat the IRS and paid $780 million while Credit Suisse Group reached a $2.6 billion deal in 2014.
Another 80 Swiss banks avoided prosecution by agreeing to pay $1.37 billion in penalties and voluntarily disclosing their wrongdoing as part of a Justice Department programme.
In 2012, HSBC paid $1.9 billion in penalties, admitting that it failed to prevent Latin American drug cartels from laundering money and violated US sanctions against Iran.
Within a year, its reform efforts met resistance from leaders of HSBC’s US investment-banking unit—some of whom mounted a campaign of bullying, foot-dragging and discrediting in-house watchdogs.