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By Dave Michaels
WASHINGTON -- A Switzerland-based subsidiary of HSBC Holdings PLC on Tuesday admitted helping Americans evade taxes over a decade and agreed to pay $192 million to settle criminal charges.
The penalty includes $60 million that represents the value of unpaid taxes resulting from HSBC Private Bank's role in the conspiracy, U.S. authorities said. The total fine also includes $71.8 million in revenue that must be forfeited, stemming from fees earned from handling the undeclared accounts, according to the U.S. Justice Department.
The private bank entered into a deferred-prosecution agreement, which allows it to avoid prosecution but requires it to continue to cooperate with U.S. authorities seeking information about tax dodgers. At its peak, the value of undeclared client assets for the HSBC private bank reached $1.26 billion in 2007, authorities said.
"We are pleased to resolve this legacy matter," Alex Classen, chief executive of HSBC Private Bank, said in a statement. "Over the past decade we have strengthened our compliance function, enhanced our control framework and put in place a comprehensive client tax transparency policy."
UBS Group AG and Julius Baer Group AG previously reached similar resolutions over hidden assets and evaded taxes with the Justice Department, while Credit Suisse Group AG paid $2.6 billion and became the first financial institution in more than a decade to plead guilty.
"HSBC Switzerland conspired with U.S. account holders to conceal assets abroad and evade taxes that every American must pay," Acting Deputy Assistant Attorney General Stuart M. Goldberg said. "Banks, asset managers and other financial firms enable such crimes -- and we will hold these institutions to account, right along with the taxpayers that use them to facilitate and disguise illegal activities."
HSBC's shares, listed on the New York Stock Exchange, were down 0.3% on Tuesday to $36.71.
The bank admitted that it helped Americans hide money in offshore accounts from 2000 to 2010. While it began to restrict the cross-border business in 2008 after the UBS investigation became public, the private bank didn't immediately cease the activity, the Justice Department said.
HSBC Private Bank said it reported its past activities to U.S. authorities before the government announced a program in 2013 designed to entice offshore banks to disclose their own wrongdoing. The Justice Department said the bank wasn't eligible for the program because an investigation had been authorized before the company reached out to prosecutors, according to HSBC's securities filings.
HSBC's private bank faced similar investigations in Belgium, Argentina, India and Spain, according to securities filings made earlier this year. Those probes looked at allegations of tax evasion or tax fraud, money laundering and illegal cross-border banking solicitations.
The parent company estimated it would spend at least $626 million to resolve the various investigations, according to securities filings. It said the amount could exceed $800 million.
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(END) Dow Jones Newswires
December 10, 2019 19:25 ET (00:25 GMT)
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