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HSBC and Its Antwerp Diamantaire Clients Face Long Investigation

Nov 26, 2014 2:39 PM   By Marc Goldstein
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RAPAPORT... On November 17, the Belgian justice department indicted HSBC Private Bank SA, the Swiss subsidiary of  HSBC Holdings,  for aggravated and organized fiscal fraud, offering illegal financial services  and for money laundering.

The bank is suspected of enabling  about 1,000 Belgians, in particular diamantaires who reside in Antwerp, to avoid taxes  through offshore trusts since 2003.

The indictment was based on enormous amounts of electronic information that had been collected  by Hervé Falciani, a former HSBC Private Bank engineer, who has been collaborating with European nations since 2009 to expose suspected tax evaders. The data  was given to Belgian authorities after investigations were conducted by tax authorities in Spain and France.

Flemish press reported that the information named 2,450 who held undisclosed accounts at HSBC Geneva, and among them, more than 70 percent were alleged to be diamantaires. A total of 369 offshore companies were illegally created through the bank.

Belgian Judge Michel Claise accused the bank of promoting tax evasion in Belgium through the scheme. The amount involved is alleged to be several billion dollars. The bank also stands accused of purposely unleashing a small army of "relationship managers" to actively recruit new clients.

The Belgium tax authority has completed its review of 191 accounts (out of 494), for which it aims to recover $543 million (EUR 434 million).  “It is far from being over, as investigations are going on,” said Francis Adyns, a spokesperson of the Belgian Public Ministry of Finance.

In the U.S., HSBC Private Bank settled with the Securities & Exchange Commission (SEC) this week for violating the bank secrecy act and advising U.S. investors without being registered to do so.  The unit was ordered to pay a penalty of $12.5 million. Additional investigations are pending with the U.S. Justice Department.

Tags: Antwerp, diamonds, fraud, HSBC, Marc Goldstein, Money Laundering, tax evasion
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