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FCA ends investigation into HSBC Swiss tax scandal

THE CITY REGULATOR will not take formal action against HSBC over the tax evasion scandal that plagued its Swiss private bank last year.

The Financial Conduct Authority (FCA) concluded its examination of the HSBC unit months ago, and that the bank was informed of its decision at the time, Sky News reports.

The furore centred on thousands of wealthy clients HSBC is said to have helped evade tax through its Swiss arm. As many as 100,000 customers were implicated, with between 6,000 and 7,000 UK-based. Many British clients of the bank had failed to declare their holdings with HMRC, and while offshore accounts are not illegal, deliberately hiding money to evade tax is.

The FCA’s review of HSBC’s Swiss private bank was not announced publicly at the time, and had not been disclosed until this week. Indeed, the FCA added the operation did not constitute a formal enforcement investigation and that a public announcement was not obligatory. A major, formal tax investigation was a matter for HMRC, it said.

The story first emerged in 2008 when HSBC whistleblower Hervé Falciani stole data from the bank’s Geneva office and attempted to contact HMRC by e-mail.

HMRC has always maintained it had no record of any contact from Falciani, but once the scandal broke, used the data to identify around 1,100 people who had dodged their tax liabilities. That evidence was used to find property millionaire Michael Shanly guilty of tax evasion, after he held his late mother’s money in an offshore account and chose not to disclose it to HM Revenue & Customs. Eventually, he pleaded guilty and was hit with an £800,000 bill. His was the only successful prosecution to have followed the data.

HSBC announced in April last year it was considering shifting its headquarters out of the UK and back to Asia – something it said it was prompted by “regulatory and structural changes” in the industry. The outcome of that nine-month review is due to be announced in the coming weeks.

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