HSBC Private Bank faces fraud charges

Also accused of money laundering

Updated: 
HSBC faces charges

HSBC's Swiss private banking arm has been charged with tax fraud and money laundering by an investigating judge in Belgium.

The unit is accused of forming a criminal organisation to benefit more than 1,000 wealthy clients but costing authorities "hundreds of millions of euros".

Prosecutors said the allegations against HSBC's Private Bank in Switzerland related to its involvement with "wealthy clients, specifically from the Antwerp diamond industry".

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A statement quoted by Reuters said: "The Swiss bank is suspected of having knowingly eased and promoted fiscal fraud by making offshore companies available to certain privileged clients."

It said that the offshore companies were based in Panama and the Virgin Islands and their only purpose was to hide the wealth of the banks' clients.

The statement added that in addition to the cost to taxpayers "much higher sums can be added" from possible money laundering operations that are being dealt with by the justice ministry.

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Five Banks Fined £2bn for Rigging Foreign Exchange Markets

The announcement comes days after the UK-based bank was fined £389 million by UK and US regulators over allegations that traders manipulated foreign exchange markets, in a multi-billion pound settlement involving six firms.

In August, HSBC warned that magistrates in Belgium and France were conducting inquiries into whether its Swiss private bank "acted appropriately in relation to certain customers who had Belgian and French tax reporting requirements".

It said at the time that there was a "high degree of uncertainty as to the terms on which the ongoing investigations will be resolved and the timing of such resolution, including the amounts of fines and/or penalties".

The group added: "As matters progress, it is possible that the fines and/or penalties imposed could be significant."

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HSBC said at the time of its third quarter update earlier this month that the Swiss private bank had been summoned to appear before French magistrates "for possible commencement of a criminal investigation".

HSBC said: "HSBC Private Bank (Suisse) 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."

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