HSBC - Bank or RICO Enterprise?

In light of the latest revelations about HSBC bank, it is difficult to view that venerable institution as anything other than the Al Capone of Banking or perhaps because of its English roots, Professor Moriarty. An insider leak has provided reams of documents on the various activities, ranging from shady to illegal, the bank performed for its wealthiest customers.

The leaked files, which reveal how HSBC advised some clients on how to circumvent domestic tax authorities, were obtained through an international collaboration of news outlets, including the Guardian, the French daily Le Monde, CBS 60 Minutes and the Washington-based International Consortium of Investigative Journalists.

The files reveal how HSBC’s Swiss private bank colluded with some clients to conceal undeclared “black” accounts from domestic tax authorities across the world and provided services to international criminals and other high-risk individuals.

The disclosure amounts to one of the biggest banking leaks in history shedding light on some 30,000 accounts holding almost $120bn (£78bn) of assets. Of those, around 2,900 clients were connected to the US, providing the IRS with a trail of evidence of potential American taxpayers who may have been hiding assets in Geneva.
A trail of evidence

The data was leaked by a computer expert turned whistleblower working in HSBC’s Geneva office. French authorities later obtained the files and shared them with the US Internal Revenue Service in 2010. That year, amid growing scrutiny from US tax authorities, HSBC’s private bank in Switzerland stopped doing business with US residents entirely.
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The US Department of Justice and IRS have been investigating HSBC’s Swiss banking operations ever since but the scale of those inquiries remain unclear.

Confronted by the Guardian’s evidence, HSBC admitted wrongdoing by its Geneva-based subsidiary. “We acknowledge and are accountable for past compliance and control failures,” the bank said in a statement. The Swiss arm, the statement said, had not been fully integrated into HSBC after its purchase in 1999, allowing “significantly lower” standards of compliance and due diligence to persist.

HSBC added: “Beginning in 2008 HSBC began to put a more rigorous control structure in place in the Swiss private bank by, for example, introducing a new policy on US persons and reducing the number of US taxpayer accounts. In 2010, the Swiss private bank decided to exit US resident client business entirely.”

However the Swiss files, made public for the first time by the Guardian and other media, are likely to raise questions in Washington over whether there is evidence to prosecute HSBC or its executives in the US. Lawmakers are also expected to question the rigour of IRS investigations into undeclared assets hidden by US taxpayers in Geneva.

The IRS said it “remains committed to our priority efforts to stop offshore tax evasion wherever it occurs”, and pointed out it has collected more than $7bn from a program, introduced in 2009, that allows US taxpayers to voluntarily disclose previously undeclared offshore accounts.

However the IRS declined to say how much it has retrieved in back taxes, interest and penalties as a result of investigations stemming from the leaked HSBC Swiss data. The IRS also declined to say how many US taxpayers have been investigated as a result of the leak, citing taxpayer privacy and the Tax Information Exchange Agreement (TIEA), a treaty that renders secret information shared between the US and France. The DoJ said it “does not confirm or deny the existence of an investigation”.

Senior Senate sources said government officials are likely to be questioned on Capitol Hill over what action was taken after the US received the leaked HSBC data almost five years ago..

Oh yes, that was just the good old days, we have changed our spots since then. And we know the DoJ bought that argument because, despite everything including major money laundering, HSBC was allowed to keep their banking license. And no doubt when all is said and done, the IRS will gets its funding cut because it didn't have enough people or money to properly investigate it all.