French ‘suspect Geneva bank in giant tax fraud’

The Geneva branch of HSBC Private Bank is suspected of helping almost 3,000 French citizens to defraud France’s tax department of more than €4 billion, according to a newspaper report.

French 'suspect Geneva bank in giant tax fraud'
Photo: AFP

Paris-based daily Le Monde based this information on “legal documents” in its possession which indicate the Swiss bank is “liable to be investigated for laundering of tax fraud”.

Two examining magistrates, Renaud Van Ruymbeke and Charlotte Bilger, are investigating the issue of French taxpayers who may have evaded taxes, following the leak of client information from former HSBC employee Hervé Falciani.

Falciani, a former IT worker at the bank in Geneva, released data to the French government in 2009 on 130,000 wealthy clients at HSBC alleged to have evaded taxes.

The Swiss issued an international warrant for his arrest for alleged contravention of banking confidentiality laws.

Falciani ended up fleeing to Spain, where the courts decided against extraditing him to Switzerland because it does not have the same banking laws.

“HSBC Private Bank (Switzerland), according to the information before us, received the proceeds from acts of tax evasion and by making financial flows opaque, laundered the illicit funds, allowing thousands of customers with significant assets to escape the French tax administration,” Le Monde said, quoting one of the documents from the investigation.

The newspaper goes on to state, that according to its information, the bank allegedly put “at the disposition of its clients accounts in the name of offshore companies” and advised them on how to disguise their assets.

Le Monde said, according to information received by French investigators, certain HSBC client managers took steps in France to “sell” the creation of offshore companies and the opening of accounts to avoid European taxes.

HSBC refused to comment on Tuesday when questioned about the report by Swiss daily Le Temps.

Le Temps raised the issue of whether France is impinging on Swiss sovereignty by investigating a bank with operations in Switzerland.

“If the French judges come to establish that there was an illegal activity on French soil, I do not see much to quarrel with,” tax lawyer Philippe Kennel told Le Temps.

“However, it seems to me that in this case they are reproaching the bank for having violated French law in Switzerland,” he said.

“And that is problematic.”

Contacted by Le Temps, a spokesman from the Swiss federal justice department is quoted as saying that since “laundering tax fraud” does not exist as a legal infraction in Switzerland with regard to direct taxes, any request for legal administrative aid would be rejected if it implies the use of “procedural constraint — for example lifting banking secrecy (laws)”.

Le Monde reported that Belgian authorities are working with the French in the case given that wealthy Belgians are suspected of also evading taxes in a similar way.  

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.


Switzerland’s banks remain among the world’s most secretive

Despite the progress made over the years, the Swiss financial sector continues to be one of the least transparent in the world. But there is good news too.

Switzerland’s banks remain among the world’s most secretive
Switzerland remains one of the world's least transparent nations. Photo AFP

Switzerland is in the third place in the 2020 Financial Secrecy Index released by the non-governmental organisation (NGO) Tax Justice Network (TJN), which rates 133 nations based on their financial transparency.

Two other European countries, Luxembourg and the Netherlands, are also ranked among the top 10 least transparent nations on the TJN’s list.

Despite being in the third place, Switzerland ranks better this year than it did in the previous edition of the Index, which is released every two years — it slipped from the first to third place. The Cayman Islands and the United States took the first and second spots, respectively.

Switzerland reduced its risk of being an offshore haven for tax cheats by 12 percent, “finally improving enough to move off the top of the index”, TJN said. 

READ MORE: Switzerland's strangest taxes – and what happens if you don't pay them

This improvement is mainly due to Switzerland extending its international network for the automatic exchange of customer information to more than 100 countries. 

Also, in a referendum held last year, Swiss voters accepted the Federal Act on Tax Reform and AVS Financing (TRAF). This legislation introduced major changes in the Swiss tax system by ending some preferential tax schemes and replacing them with new regulations which are in line with international standards.

This tax reform prompted the European Union to change Switzerland's status from ‘tax haven' to one which is EU-compliant, removing strict controls on transactions within the EU. 

So why, despite all the reforms, does Switzerland still rank among the world’s least transparent nations?

According to a Swiss NGO Alliance Sud, wealthy people from poor countries can still hide their money here from the tax authorities of their home nations.

Alliance Sud noted that despite the progress made in the past years by Swiss financial institutions, “the fight against tax evasion remains insufficient”.

Switzerland is the world’s biggest centre for managing offshore wealth, with a quarter of global assets invested here.

For years, it has been placed on various lists of tax havens where wealthy foreigners could park their money. Faced with widespread criticism for this practice, Switzerland passed an anti-money laundering law in 1997 and introduced strict regulations against tax evasion.