The Swiss private banking division of HSBC has agreed to pay over US$190 million as part of a deferred prosecution agreement concerning its role in helping U.S. clients hide assets and income from U.S. tax authorities.
The U.S. Department of Justice (DoJ) announced that Geneva-based HSBC Private Bank (Suisse) SA will pay a total of US$192.35 million under a deferred prosecution agreement that sees the bank admit to conspiring with clients to evade U.S. taxes.
The DoJ reports that, according to court documents, HSBC Switzerland admitted to conspiring to evade taxes and to file false federal tax returns through undeclared U.S. client relationships that, at their peak, represented approximately US$1.26 billion in undeclared assets.
“To conceal its clients’ assets and income from the IRS, HSBC Switzerland employed a variety of methods, including relying on Swiss bank secrecy to prevent disclosure to U.S. authorities, using code-name and numbered accounts and hold-mail agreements, and maintaining accounts in the names of nominee entities established in tax haven jurisdictions, such as the British Virgin Islands, Liechtenstein, and Panama, that concealed the client’s beneficial ownership of the accounts,” the DoJ said.
The sanctions include US$60.6 million in restitution to the U.S. Internal Revenue Service, representing unpaid taxes; US$71.85 million in gross fees that the bank generated on undeclared accounts between 2000 and 2010; and a US$59.9-million penalty.
The penalties imposed under the deferred prosecution agreement take into consideration that the bank self-reported the conduct, cooperated with U.S. authorities, and took measures to guard against future misconduct. The deal doesn’t protect any individuals that were involved.