Facing a multi-nation probe for "alleged tax evasion, money laundering and unlawful cross- border banking solicitation", global giant HSBC on Monay said it has been served summons by the Indian tax department.
The bank said it was being probed by tax authorities in many other countries as well with regard to alleged irregularities by its Swiss banking unit and there could be "significant" amounts of fines, penalties and/or forfeitures imposed on it.
Separately, the UK-based bank said it has also received "subpoenas and requests for information" from the US and other authorities with respect to certain US-based clients of an HSBC company in India.
This case relates to some NRIs facing investigation in the US for alleged violation of the American tax laws. A leaked list of over 100,000 account holders in HSBC's Swiss banking unit, including 1,195 Indians, recently became public, prompting authorities in India and many other countries to launch their investigations to ascertain whether these accounts had illicit money stashed abroad.
Giving an update on the case in its annual report, HSBC said it was cooperating with the
relevant authorities, while adding that it was possible that other tax administration, regulatory or law enforcement authorities would also initiate or enlarge similar investigations or regulatory proceedings.
"Based on the facts currently known, there was a high degree of uncertainty as to the terms on which they would be resolved and the timing of such resolutions, including the amounts of fines, penalties and/or forfeitures imposed on HSBC, which could be significant," it added.
With regard to India, the bank said earlier this month a public prosecutor in Switzerland commenced an investigation of HSBC Swiss Private Bank, and "the Indian tax authority issued a summons and request for information to an HSBC company in India".
The bank's group chairman Douglas Flint said that the recent disclosures about historical practices at Swiss bank "remind us of how much there still is to do." Last week, the Swiss police conducted raids at HSBC's Geneva offices in connection with their probe into suspected money laundering operations.
Besides India, HSBC said, various tax administration, regulatory and law enforcement authorities around the world, including in Belgium, France, Argentina and Switzerland, are conducting investigations and reviews of HSBC Swiss Private Bank in connection with "allegations of tax evasion or tax fraud, money laundering and unlawful cross-border banking solicitation".
The bank said that HSBC Swiss Private Bank has been placed under formal criminal examination by magistrates in both Belgium and France.
"Our Swiss Private Bank customer base and the countries we serve are now both about one-third of the size they were in 2007," Flint said, while adding that HSBC was already taking various measures to foster greater transparency.
"We cannot change the past. But, looking to the future, we can and must reinforce controls and provide demonstrable evidence of their effectiveness. This forms part of our commitment to Global Standards, to ensure that we will never knowingly do business with counterparties seeking to evade taxes or use the financial system to commit financial crime."
HSBC chief had £5mn in Swiss bank account
Stuart Gulliver, the chief executive of HSBC who publicly apologised over claims that its Swiss subsidiary helped clients evade tax, held £5 million there in a Swiss bank account. He was also a client of its Geneva-based private bank, amassing a $7.6 million credit balance by 2007, according to documents.