By Reuters (Business Day)
Executive summary (SAIT Technical)
HMRC is investigating HSBC, the biggest bank in Europe after a list was leaked indicating that the bank provided accounts for alleged criminals in the tax haven of Jersey.HSBC said it was investigating the alleged loss of client data.
HSBC, Europe’s biggest bank, is at the centre of an investigation by British tax authorities into leaked data that a newspaper said showed it provided accounts in the tax haven of Jersey for alleged criminals.
The authorities confirmed they were looking into details of clients in the Channel island after being handed a list of names, addresses and account balances.
"We can confirm we have received the data and we are studying it. We receive information from a very wide range of sources which we use to ensure the tax rules are being respected,” HM Revenue & Customs (HMRC) said in a statement.
HSBC said it was investigating the alleged loss of client data, first reported in the Daily Telegraph, "as a matter of urgency”.
The Telegraph said some of the clients were convicted criminals or facing criminal allegations.
"We have not been notified of any investigation in relation to this matter by HMRC or any other authority but, should we receive notification, we will co-operate fully with the authorities,” the bank said on Friday.
HSBC said it was "fully committed to adoption of the highest global standards including the procedures for the acceptance of clients”.
Like all banks, HSBC, which has been criticised by US regulators for lax anti-money-laundering controls in Mexico and elsewhere and last year saw thousands of its Swiss clients probed by the British taxman, is obliged to report to authorities any suspicions about the source of money deposited in its accounts.
After the financial crisis, the banking industry around the world is under intense scrutiny over its standards and past practices, which have included mis-selling of financial products and interest rate-rigging. And banks have become caught up in cash-strapped governments’ efforts to crack down on tax evaders sheltering money in offshore accounts.
"It feels to me like the banking sector is being seen as a money-stuffed piata for everyone to have a whack at — be it regulators or governments or consumers,” said one of HSBC’s 10 biggest investors.
"I am very bothered, but is this an HSBC-specific issue? No, I do not think it is. I think that general standards of compliance are being challenged everywhere,” the investor said.
CEO Stuart Gulliver has not come under much pressure from investors since the damning US money-laundering report as he only took the helm at the start of 2011. But he acknowledged this week it would take the industry time to clean up the mess from past mistakes.
"There are a whole series of things that came from probably a decade in the 2000 to 2008-09 period that have surfaced now that the industry needs to sort out, remediate, and make sure do not happen again,” Mr Gulliver said after setting aside more money last Monday for a potential US fine.
HSBC said earlier this week that the US probe into anti-money-laundering failures could result in a fine well more than $1.5bn and lead to criminal charges.
Investors said the US anti-money laundering scandal was a far bigger blow for the bank than a tax investigation would be.
"I do not think it’s enough to derail the management. Mr Gulliver is regarded materially more highly than his predecessor,” a second top-10 investor in the bank said.
The leaked account data identified 4,388 British-based people holding £699m in current accounts, and also included celebrities, bankers, doctors, mining and oil executives and oil workers. It also included about 4,000 account holders with addresses outside Britain.
HSBC’s clients came under scrutiny from HMRC last year when the tax authority contacted up to 6,000 Swiss client account holders after getting their details following an exchange agreement with French authorities.