To finally close the long-running tax evasion case against it, HSBC's Swiss private bank has agreed to pay $192.4 million to the US Department of Justice in penalties and forfeiture. Apart from the hefty fine, the bank also admitted to conspiring with US taxpayers in its attempt to avoid paying taxes on around $1.26 billion worth of undeclared assets.
The Justice Department announced on Wednesday that HSBC Private Bank Suisse had fully cooperated with the agency and the Internal Revenue Service (IRS) during their joint investigation. With the deal, the investigation will now be entering a deferred prosecution agreement that essentially saves the company from any possible criminal charges if it follows all of the regulator's conditions in the next three years.
The investigation on HSBC Private Bank's tax evasion scheme began more than a decade ago after US authorities uncovered the company's undeclared assets that were placed on accounts of different individuals and families in Switzerland.
Acting deputy assistant attorney general for the Justice Department's tax division, Stuart M. Goldberg, stated that HSBC Switzerland had conspired with US-based individuals, helping them hide their assets abroad in an attempt to evade paying taxes that should be paid.
In response to the settlement, HSBC Private Bank (Suisse) chief executive Alex Classen mentioned in a statement that they are pleased to have finally resolved the long-running matter. Classen emphasized that the bank has since strengthened its compliance function since the investigation was launch more than a decade ago. The bank mentioned that it has included a comprehensive client tax transparency policy on all accounts in an effort to avoid any future issues.
The settlement reached on Wednesday is the latest in a series of litigation against HSBC Private Bank for its involvement in tax evasion cases. In 2017, the bank agreed to pay $332.7 million to French authorities over a number of tax evasion cases against French citizens. In August of this year, the bank paid $326 million to Belgian authorities to settle a criminal case against it over its holding of undeclared assets.
The investigation into the bank and other Swiss financial institutions have managed to uncover the hidden world of Swiss banking. In 2009, US authorities had forced UBS to disclose the names of American citizens holding undeclared assets in its banks in Switzerland.
UBS was also forced to pay a hefty $780 million fine for its part in allowing the US citizens to hide their assets from tax collectors. The clampdown on Swiss banks by US authorities has resulted in a number of Swiss institutions no longer servicing American clients.
