In a fresh disclosure, British bank HSBC said that it was being investigated by tax and law enforcement agencies around the world, including India, the US, France and Belgium, for alleged tax evasion, money laundering and unlawful cross-border banking solicitation.
HSBC has also disclosed being probed by tax authorities in India and several other countries, including against its Swiss and Dubai units, for allegedly abetting tax evasion of four Indians and their families.
The Indian tax authority have claimed they have sufficient evidence to initiate probe.
The HSBC annual report says Indian tax authorities in February 2015 had issued summons and request for information to an HSBC company in India.
Also, two offices of the Indian tax authority sent notices to HSBC companies in August 2015 and November 2015 on the matter.
The Indian government has stepped up its fight against blackmoney, allegedly stashed in Switzerland, in recent years and there have been apprehensions that the so-called illicit wealth might have got shifted to other places such as Dubai.
Besides, the bank has been approached by the regulatory and law enforcement agencies of various countries for information on persons and entities named in the leaked ‘Panama Papers’ which included hundreds of Indians who had indulged in alleged tax violations through offshore tax havens with the help of Panamanian law firm Mossack Fonseca.
Various tax administrations, regulatory and law enforcement authorities around the world, are conducting investigations and reviews of HSBC Swiss Private Bank and other HSBC companies in connection with allegations of tax evasion or tax fraud, money laundering and unlawful cross border banking solicitation.
The authorities have asked the HSBC companies to, “show why such prosecution should not be initiated.” The bank clarified that both HSBC Swiss Private Bank and the HSBC company in Dubai have responded to the show cause notices.
HSBC is cooperating with the relevant authorities. It has said that it has set aside over Rs 5,000 crore($773 million) as a provision for various tax, and money laundering-related matters.There are many factors that may affect the range of outcomes, and the resulting financial impact, of these investigations and reviews. Due to uncertainties and limitations of these estimates, the ultimate penalties could differ significantly from the amount provided,” it added.
The RBI had concluded that HSBC may have possibly encouraged Foreign Exchange Management Act (FEMA) breaches by allowing certain customers to bank with offshore private banking locations despite not qualifying for the same.