You are here
HSBC condemns past practices
[LONDON] The head of HSBC's private bank has told staff past practices that may have allowed some clients to dodge taxes are unacceptable, with the company facing pressure on both sides of the Atlantic over its conduct.
HSBC this week admitted failings in compliance and controls in its Swiss private bank and faces investigation by US authorities and an inquiry by British lawmakers after media reports said it helped wealthy customers conceal millions of dollars of assets in a period up to 2007.
Adding to HSBC's discomfort, British Business Secretary Vince Cable questioned how quickly its Swiss business stopped such practices, saying he was troubled by claims they "may have continued much more recently".
HSBC has been in the spotlight after the media published allegations based on information supplied by Herve Falciani, a former employee of the bank.
Details that have emerged on the HSBC Swiss bank account holders were only "the tip of the iceberg," Mr Falciani told French daily Le Parisien on Tuesday. Tax authorities have had access to much more data than media, he added.
The reports have renewed scrutiny on the world's second biggest bank, which was fined US$1.9 billion two years ago by US authorities for lax controls that allowed criminals to launder money. It was also hit with a US$618 million penalty by regulators in November for alleged manipulation of currency markets.
HSBC and Swiss-based banks have been under fire for helping clients avoid taxes for several years. HSBC said past compliance measures and controls failed, but said its Swiss business had since been "transformed" and client accounts had been closed.
It sought to drive home that message to its staff. "The practices and the banking model of that time are no longer acceptable," Peter Boyles, chief executive of HSBC's Global Private Banking since Dec 2012, said in a memo. "Our clients want to know that we have changed and the past practices they read about in the papers have no place in our modern private bank," a person familiar with the contents of Mr Boyles' memo told Reuters.
Mr Boyles told staff the bank had "absolutely no appetite" to do business with people who are evading taxes.