14 Aug 2018
HSBC has set aside $632 million to settle a number of investigations into allegations of tax evasion and other crimes such as money laundering, but expects the amount could go up to $1.5bn, according to its interim results.
The bank is currently being investigated and reviewed by various authorities around the world, including in the United States, Argentina and India.
The probes and actions pertain to HSBC Private Bank (Suisse) SA (‘HSBC Swiss Private Bank’) and other HSBC companies, and cover allegations of tax evasion, money laundering and unlawful cross-border banking solicitation.
“Various tax administration, regulatory and law enforcement authorities around the world, including in the US, Belgium, Argentina, India and Spain are conducting investigations and reviews of HSBC Private Bank (Suisse) SA (‘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 bank said.
Some of the ongoing investigations include that of the US Department of Justice and Internal Revenue Service regarding whether HSBC companies and employees ‘acted appropriately in relation to certain customers who may have had US tax reporting obligations.’
HSBC is also ‘cooperating’ with the authorities in Argentina regarding tax evasion and money laundering issues, after its tax authority initiated a criminal action in 2014 against various individuals, including current and former HSBC employees.
“The criminal action includes allegations of tax evasion, conspiracy to launder undeclared funds and an unlawful association among HSBC Swiss Private Bank, HSBC Bank Argentina, HSBC Bank USA and certain HSBC employees, which allegedly enabled numerous HSBC customers to evade their Argentine tax obligations. HSBC is cooperating with this ongoing investigation,” HSBC said.
It added that as at 30 June 2018, it has recognised a provision for these various matters in the amount of $632m.
“There are many factors that may affect the range of outcomes, and the resulting financial impact, of these investigations and reviews. Based on the information currently available, management’s estimate of the possible aggregate penalties that might arise as a result of the matters in respect of which it is practicable to form estimates is up to or exceeding $1.5bn, including amounts for which a provision has been recognised,” the bank explained.
– Irene Madongo
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