London/Zurich. British bank HSBC Holdings admitted failings by its Swiss subsidiary in response to media reports it helped wealthy customers dodge taxes and conceal millions of dollars of assets.
“We acknowledge and are accountable for past compliance and control failures,” HSBC said late on Sunday after news outlets including French newspaper Le Monde and Britain’s The Guardian published allegations about its Swiss private bank.
HSBC said that its Swiss arm had not been fully integrated into HSBC after its purchase in 1999, allowing “significantly lower” standards of compliance and due diligence to persist.
The Guardian alleged in its report that the files showed HSBC’s Swiss bank routinely allowed clients to withdraw “bricks” of cash, often in foreign currencies which were of little use in Switzerland.
“Clearly HSBC have got questions to answer. Clearly the behaviour that is set out in these disclosures reveal behaviour in 2005 to 2007 that is not what we would expect from a major bank,” he said, calling tax evasion “completely unacceptable.”
The HSBC client data were supplied by Herve Falciani, a former IT employee of HSBC’s Swiss private bank, HSBC said. HSBC said Falciani downloaded details of accounts and clients at the end of 2006 and early 2007. French authorities have obtained data on thousands of the customers and shared them with tax authorities elsewhere, including Argentina.
Falciani could not be reached for comment. He has previously told Reuters he is a whistleblower trying to help governments track down citizens who used Swiss accounts to evade tax.
HSBC said the Swiss private banking industry, long known for its secrecy, operated differently in the past and this may have resulted in HSBC having had “a number of clients that may not have been fully compliant with their applicable tax obligations.”
Its private bank, especially its Swiss arm, had undergone “a radical transformation” in recent years, it said in a detailed four-page statement.
HSBC shares fell 1.5 percent by 11.30 GMT on Monday, in line with a drop by the broader European banking index.
The ICIJ said details of more than 100,000 clients had been obtained from more than 200 countries. It said 11,235 were based in Switzerland, 9,187 were in France, 8,844 were in Britain, 8,667 were in Brazil and 7,499 were from Italy.
The clients’ accounts held more than $100 billion, including $31.2 billion from clients based in Switzerland, $21.7 billion from Britain, $14.8 billion from Venezuela and $13.4 billion from U.S. clients, the ICIJ said.
HSBC said the number of accounts in its Swiss private bank was much lower, however. It could not explain the difference. HSBC said its Swiss private bank had 30,412 accounts in 2007, which had fallen to 10,343 at the end of last year.
Britain viewed criminal prosecutions as difficult to achieve and the tax office had focused on taking civil action, minister Gauke said. The UK tax office said it had brought in 135 million pounds ($205 million) in tax payments, interest charges and penalties after working through the HSBC client list.
Some of the details of the list have been released before. The names of 2,000 Greeks with HSBC accounts was made public in 2010 and dubbed the “Lagarde List” after former French finance minister Christine Lagarde. France passed the names to Greece to help it crack down on tax evasion.