Offshore

US Tax Probe Will Include Credit Suisse, HSBC

Wendy Spires December 3, 2008

US Tax Probe Will Include Credit Suisse, HSBC

The US Department of Justice, which is carrying out a probe into foreign banks which provide offshore private banking services, has expanded its tax fraud investigations to include Credit Suisse and HSBC, according to a New York Times report.

Citing people briefed on the matter, the NYT reported that investigations into HSBC and Credit Suisse started in September, focusing on whether the two banks helped high net worth clients to evade US taxes by hiding up to $30 billion in offshore accounts.

According to the paper’s sources, the US investigations into HSBC and Credit Suisse are at an early stage and as yet no particular executives are being targeted.  

A spokesperson for HSBC Private Bank told WealthBriefing: “We are not aware of HSBC being investigated in connection with its offshore private banking services in the US and HSBC has not received any contact from the US authorities with regard to any such investigation. 

“HSBC complies with the letter and spirit of the laws and regulations in all the countries and territories it does business in around the world. We are confident that our US business is compliant with its local regulatory requirements. We have good relationships with our regulators and cooperate with investigations when required to do so.”

Credit Suisse said it was “not aware of any such investigations”, adding that it adhered to the highest applicable compliance regulations and policies.

If found to be true, the US investigations into Credit Suisse and HSBC are an offshoot of an ongoing enquiry into the activities of Swiss banking giant UBS.

Earlier this year, UBS banker Bradley Birkenfeld pleaded guilty for his role in helping wealthy clients avoid US taxes, while last month saw the indictment of Raoul Weil, the former chief executive of UBS Global Wealth Management. 

It is thought that others at the bank may still have to face charges as the indictment of Mr Weil referred to as yet unnamed co-conspirators at “the highest level of management” within UBS.

Meanwhile, the IRS is debating how to settle tax disputs with scores of HNW US clients who use offshore private banking services sold by UBS and other foreign banks, according to lawyers who represent those clients, the NYT said.

The unusual discussion, which has reached the highest levels of the agency in recent weeks, centers on the question of the steep penalties — 50 per cent annually of the sums parked in each account — typically levied on money hidden offshore. Clients who used undeclared accounts for years can owe the IRS. many times what those accounts hold, even before back taxes and interest.

Register for FamilyWealthReport today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes