wednesday, 18 february of 2015

HSBC’s Swiss Unit Probed by Prosecutor

The Geneva public prosecutor’s office has begun a search of the offices of U.K. banking giant HSBC Holdings PLC’s Swiss unit as part of a probe into alleged money-laundering activities.

Geneva Attorney General Olivier Jornot and the prosecutor Yves Bertossa are conducting the search of HSBC Private Bank (Suisse) SA in Geneva, which is part of an investigation into “aggravated money laundering,” the prosecutor’s office said in a statement Wednesday.

The investigation may be extended to individuals who are suspected of money laundering acts in the future, the statement added.

A spokesman for HSBC in Switzerland said the bank was cooperating with Swiss authorities.

The U.K. bank’s Swiss unit has been under the spotlight for years, following the theft of data by a former employee and the opening of a criminal investigation by U.S. authorities into its alleged aiding of tax evasion.

The issue surfaced last week when a mountain of new details on HSBC’s Swiss bank’s historical services for unsavory characters and tax evaders was dumped on the media. U.K. Prime Minister David Cameron   and Chancellor of the Exchequer George Osborne have been accused by rival Labour Party politicians of turning a blind eye to HSBC’s activities when former HSBC Chairman Stephen Green   was appointed as trade minister in 2011, and U.K. tax officials were lambasted by lawmakers last week over their efforts to prosecute Britons who allegedly evaded tax through Swiss HSBC accounts.

Mr. Green, who had also been chairman of HSBC’s Swiss private bank, stepped down from his government role in December 2013.

The fresh details, provided by former HSBC employee Herve Falciani to the International Consortium of Investigative Journalists and several media outlets, illustrate how HSBC allegedly sheltered secret accounts for what the ICIJ called “dictators and arms dealers” as well as rock stars.

The ICIJ report also describes ways the bank allegedly advised clients on ways to avoid paying taxes on their funds in their home countries, and it lists clients who are on U.S. sanctions lists or were ousted in the Arab Spring.

The prosecutor’s office appeared to reference the ICIJ’s report in its statement, saying the search had been initiated because of “recent public revelations” about HSBC’s Swiss private banking unit.

Franco Morra, chief executive of HSBC’s Swiss bank, said on Feb. 9 that the unit “began a radical transformation in 2008 to prevent its services from being used to evade taxes or launder money. New senior management have comprehensively overhauled the business, including closing the accounts of clients who didn’t meet our high standards and ensuring we have strong compliance controls in place.”

HSBC Chief Executive Stuart Gulliver   in full-page newspaper ads over the weekend apologized to customers  and said the Swiss private bank has been “completely overhauled.”

(Published by The Wall Street Journal – February 18, 2015)

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