Feb. 10, 2015

Public Citizen Demands Full Account of HSBC Tax Evasion Case

Statement of Bartlett Naylor, Financial Policy Advocate, Public Citizen’s Congress Watch Division

Public Citizen applauds the international media investigation into HSBC’s dealings with more than 100,000 clients for whom the bank provided Swiss bank accounts in possible attempts to help them conceal assets and evade taxes. Helping clients to evade taxes is a violation of federal law.

Because they were reportedly given a list in 2010 of roughly 2,900 U.S. residents holding HSBC-furnished Swiss bank accounts, the U.S. Department of Justice and IRS are obliged to explain what steps they have taken to investigate whether HSBC or its account holders have violated the law. To the extent that the federal departments have learned of legal violations related to the list of account holders, they should inform the public.

A recent Public Citizen report (PDF) itemizes other recent problems at HSBC. The report enumerates that HSBC furnished “correspondent” bank accounts with multi-jurisdictional financial services firm, Sovereign Management & Legal Ltd., which the Justice Department accused of aiding clients in tax evasion. Separately, in November 2014, Belgium accused HSBC of helping its residents evade taxes.

All of this news comes on the heels of a deferred prosecution agreement signed in 2012 by the Justice Department and HSBC over money laundering crimes. That agreement, in which HSBC agreed to pay $1.9 billion but escaped criminal conviction, was widely criticized for failing to punish HSBC in proportion with the crimes the bank committed. The settlement was signed by U.S. Attorney Loretta Lynch, who awaits U.S. Senate confirmation to become the new U.S. attorney general.

The newly revealed allegations that HSBC conspired with clients to evade taxes raise all sorts of additional questions, especially because the HSBC actions described by the journalism consortium predated the deferred prosecution agreement.

U.S. senators deciding whether to confirm Lynch should take time to learn what she and the Justice Department knew about HSBC’s complicity in tax evasion at the time the deferred prosecution agreement was signed.

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