HSBC ‘pushed secret accounts in 25 countries’

Bankers from HSBC's Swiss division held hundreds of often illegal meetings with wealthy clients in 25 countries as part of their efforts to open undeclared accounts for them, Swiss media reported on Tuesday.

HSBC 'pushed secret accounts in 25 countries'
Photo: AFP

The latest files in the so-called Swiss Leaks affair shows that during 2004 and 2005 the bankers had at least 1,645 meetings in 25 countries with clients or prospective clients, the newspapers Tages Anzeiger and Le Temps reported.
The meetings occurred in places as diverse as luxury hotels in Paris and Tel Aviv, a piano bar in Antwerp, the airport in Pointe-Noire, Congo, and a summer residence in Copenhagen.
The meetings conducted by "relations managers" were legal if they were just courtesy calls but not if business was done, such as when the bank obtained new funds or helped customers avoid taxes, the papers said.
Five of the 25 countries — the United States, France, Argentina, Spain and Belgium — have begun legal action against HSBC Switzerland.
According to one SwissLeaks file, a retired Turkish-born man met in Paris in January 2005 with a relations manager.
"The customer wanted to see me to discuss closing two accounts with Barclays and UBS and transferring the (money) to us," the file quoted the manager as saying, adding that he expected the bank to receive about one million dollars in the transaction.
The papers reported that the bankers also used the meetings to propose to their customers ways to avoid a European tax on deposits in Switzerland held by Europeans.
The tax, called the European Savings Directive, took effect in 2005.
As the directive concerned only accounts held by physical persons, HSBC Switzerland proposed that its clients create offshore companies and place their funds there, according to the files.
The files created global shockwaves on Monday, highlighting the financial dealings of the world's ultra-rich and prompting British lawmakers to launch an inquiry into the London-based bank.
Celebrities, alleged arms dealers and politicians are named in the files, though their inclusion does not necessarily imply wrongdoing.
Published at the weekend, the files claim that HSBC's Swiss division helped clients in more than 200 countries evade taxes on accounts containing $119 billion (104 billion euros).
Hervé Falciani, an IT worker turned whistleblower, stole the files in 2007 and passed them to French authorities, but they had not been previously made
The International Consortium of Investigative Journalists obtained the files via French newspaper Le Monde and shared them with more than 45 other media organizations worldwide.

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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.