HSBC appears to be the latest bank caught in the searchlight trained on offshore tax evasion. The U.S. Department of Justice has been investigating claims that Swiss branches of that bank aided U.S. taxpayers with offshore bank accounts shelter income from the reaches of the Internal Revenue Service.
Last December, the government made an initial request for information from HSBC. The bank partially complied with the request earlier this year when it released some information, and it recently handed over additional records to U.S. officials. According to an HSBC spokesperson, the paperwork does not contain any data on the bank's clients. The law firm representing HSBC said that Swiss law required them to remove information that could be traced back to a client.
Instead, the documents show internal emails and minutes of various company meetings. The records also reveal the names of onetime and current HSBC employees. Although there is precedent for this release of employee information--Julius Baer and Credit Suisse made similar arrangements with U.S. authorities--some HSBC workers are considering legal action against the bank.
Swiss banks could face extensive financial penalties if evidence comes to light that shows they helped U.S. taxpayers with offshore bank accounts evade taxation. Three years ago, UBS avoided criminal charges by agreeing to pay $780 million to U.S. authorities. One attorney representing HSBC employees has said that the bank could face penalties in excess of $1 billion, which could be reduced by working with the U.S. investigation.
The dogged efforts of the IRS and the Department of Justice to pursue tax evasion highlight the need to become and remain compliant with all applicable overseas reporting and taxation requirements.
Source: Reuters, "HSBC hands US more staff names in tax evasion probe," Martin de Sa'Pinto, Aug. 15, 2012.