The Swiss branch of HSBC Holdings PLC has agreed to pay Belgium €294.4 million to settle a case involving allegations of serious tax fraud and money laundering.
Belgian prosecutors announced the settlement with HSBC Private Bank Holdings (Suisse) SA in a press conference on August 6. While the bank didn’t respond to a request for comment, it said in its interim financial results for the second quarter, which were released on August 5, that it had reached a settlement in principle to resolve the Belgian investigation into “historical tax-related offenses.”
“The settlement in principle is subject to court approval and there can be no assurance that the proposed resolution will be approved,” HSBC said. “Management’s estimate of the expected outflow under the settlement in principle is already covered by the existing amount provisioned for this matter.”
The bank previously said that HSBC Holdings and HSBC Private Bank SA were placed under formal criminal examination in Belgium in 2017 for alleged tax-related offenses. In 2014 prosecutors in Brussels accused the private banking unit of HSBC Holdings of tax fraud, money laundering, and providing illegal financial services by helping Belgians move savings from Swiss accounts to holding companies in Panama and the British Virgin Islands.
In February, HSBC reduced by approximately $700 million its estimated liability stemming from tax investigations of its Swiss and other subsidiaries by tax authorities in at least four countries. In releasing its 2018 financial statements, London-based HSBC said that it has taken a charge of $626 million, which was subsequently revised to $629 million, for potential liabilities covered by the tax probes.
In its financial statements for the second quarter, HSBC said it continues to cooperate in investigations by the U.S. Department of Justice and the IRS into whether HSBC Private Bank SA and an unidentified subsidiary in India “acted appropriately in relation to certain customers who may have had U.S. reporting obligations.” HSBC does not qualify for the Swiss bank program — which allows financial institutions to enter into non-prosecution agreements in exchange for full disclosure of cross-border activities, cooperation in investigations, and payment of a possible fine — because it was the subject of a formal U.S. criminal investigation before the program was implemented.
The bank also said it is cooperating with a previously disclosed criminal investigation started in 2014 by Argentine authorities into allegations of tax evasion, conspiracy to launder undeclared funds, and unlawful association.