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HSBC publishes apology in London newspapers over Swiss Private Bank's past practices

Monday, 16 February, 2015

HSBC yesterday published a full-page advertisement in several British newspapers apologising for the past practices of its Swiss Private Bank.

In the past week several media outlets have obtained the names of prominent UK residents who held undeclared accounts at HSBC Suisse. The names were among several thousand on a list stolen from the bank in 2007 by former employee Hervé Falciani. The list was subsequently seized by the French government and distributed by then Finance Minister Christine Lagarde to several foreign tax authorities, including HM Revenue and Customs. It has now become public.

The resulting controversy of the past week has often carried the implication that the bank helped its clients evade tax, forcing the bank to respond in detail. Its published apology does not admit deliberately assisting tax evasion, but it does concede that 'the standards to which we operate today were not universally in place in our Swiss operation 8 years ago'.

In its HSBC’s Swiss Private Bank Progress Update - January 2015, the bank also acknowledged that 'in the past[...]private banks, including HSBC's Swiss private bank, assumed that responsibility for payment of taxes rested with individual clients, rather than the institutions that banked them[...]in some cases individuals took advantage of bank secrecy to hold undeclared accounts'.

However, the focus of the HSBC advert – signed by Chief Executive Stuart Gulliver – is to demonstrate that since 2008 the bank's practices have changed in line with the general move to international transparency in banking.

The statement reads: 'We must show we understand that the societies we serve expect more from us. [...] We have absolutely no appetite to do business with clients who are evading their taxes or who fail to meet our financial crime compliance standards'.

The advert nonetheless contradicts some of the media coverage. It notes that many of the 140 people so far named in the media 'have no allegation of wrongdoing against them whatsoever but have been named simply because they are well-known individuals'. Moreover, it says, the vast majority of them are no longer clients; according to the statement, one of them even ceased to have an HSBC account in 1991.

  • HM Revenue and Customs has also issued a statement describing its actions against HSBC clients on the so-called Lagarde list. It reveals that it was in fact HMRC, not the French government, that initiated the handover of the list in 2010, by making a request under the mutual tax information treaty. It then set up a project, Operation Solace, to trace the 3,600 accountholders, 2,000 of which turned out to be tax-compliant. Most of the rest could not be prosecuted because stolen data is considered tainted and needs additional corroborating evidence, although many agreed to pay back taxes under a voluntary disclosure agreement. Only about 100 cases have not yet been resolved. HMRC is now requesting that the media organisations who have obtained the list hand over their versions so that they can be checked for additional information.