HSBC Jersey Account-Holder List Probed by U.K. Tax Authority
British tax authorities are investigating a list of more than 4,000 British residents who have bank accounts with HSBC Holdings Plc (HSBA), the country’s largest lender, in the offshore tax haven of Jersey.
“We have received the data and we are studying it,” Jan Marszewski, a spokesman for Her Majesty’s Revenue and Customs, said by telephone today. “Clamping down on those who try to cheat the system through evading taxes and over claiming benefits is a top priority for us.”
The list, leaked by a whistle-blower, includes a man who was jailed for two years after more than 300 guns were found in his house and the owner of a farm where police discovered cannabis valued at 500,000 pounds ($800,000), according to the Daily Telegraph, which first reported the document.
Chief Executive Officer Stuart Gulliver’s attempts to cut costs at the bank are being hobbled by probes into money laundering and compensation claims from British clients. The London-based lender said this week it’s likely to face criminal charges from U.S. anti-money-laundering probes and warned the cost of a settlement may “significantly” exceed the $1.5 billion the bank has so far set aside.
“Reputationally, obviously it’s damaging and it doesn’t help their relationship with their regulator either,” said Sandy Chen, an analyst at Cenkos Securities in London who rates the bank a hold.
The stock fell 0.3 percent to 600.9 pence in London trading, giving the bank a market value of about 110.6 billion pounds.
“We are investigating the reports of an alleged loss of certain client data in Jersey as a matter of urgency,” HSBC said in an e-mailed statement today. “We haven’t been notified of any investigation in relation to this matter by HMRC or any other authority but, should we receive notification, we will cooperate fully with the authorities.”
HSBC’s Swiss private bank is one of 11 financial firms in the Alpine country being investigated by the U.S. Department of Justice for allegedly helping American clients evade taxes. HSBC said in May that fines and penalties to settle the tax-evasion probe could be “significant.”
The Swiss unit has suffered “reputational and financial damage” since Herve Falciani, a former software technician in Geneva, stole details on 24,000 accounts, Gulliver said in May. The French government has used the data to search for tax dodgers and shared the information with Italian, Spanish and British prosecutors.
A U.S. Senate committee said in July that failures in HSBC’s money-laundering controls allowed terrorists and drug cartels access to the U.S. financial system. Standard Chartered Plc (STAN), which like HSBC makes most of its profit in Asia, paid $340 million in August to settle a regulator’s claim it broke Iranian-sanctions rules.
A settlement of $1.5 billion for HSBC would be the biggest reached over the U.S. allegations, topping the $619 million in penalties paid in June by ING Groep NV, the biggest Dutch financial-services company.
HSBC, Standard Chartered and other European banks have been under investigation by U.S. regulators that include the Treasury Department’s Office of Foreign Assets Control, the Federal Reserve and Manhattan District Attorney Cyrus Vance Jr.
The multi-year probe into money-laundering has resulted in settlements with Lloyds Banking Group Plc (LLOY), ABN Amro Bank NV, Barclays Plc, Credit Suisse Group AG and ING.
HSBC in the U.K. has set aside about $2.1 billion to compensate clients who were wrongly sold insurance typically used to cover repayments on mortgages, credit cards and other loans.
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