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Tuesday 6 December 2016

US demands HSBC give up potential tax evaders

Stephen Foley in New York

Published 08/04/2011 | 10:24

The US is demanding that HSBC should reveal the names of potentially thousands of Americans who have opened secret accounts with the bank in India, in a widening investigation into tax evasion.

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The US government filed a so-called "John Doe summons" on HSBC India last night via a petition in a San Francisco court, which asked for the names of an unknown number of people who may have engaged in tax fraud.

HSBC last night said it had not seen the summons but it would co-operate with requests from the US authorities, while complying with the law in all the jurisdictions it operates in, including India.

It added: "HSBC does not condone tax evasion and fully supports the US efforts to promote appropriate payment of taxes by US taxpayers."

The petition is a repeat of a legal tactic first used against UBS, and comes two years after the Zurich-based bank agreed to pay $780m (€541m) to the US government and revealed the details of 4,000 US clients' Swiss bank accounts after admitting it helped those who wanted to evade US taxes.

The deal blew a hole in Switzerland's traditional banking secrecy, and encouraged US residents to reveal their offshore accounts in amnesties offered by the Internal Revenue Service.

"The ability to hide accounts in foreign countries is rapidly dwindling," said John DiCicco, deputy assistant attorney general for the Justice Department's tax unit, announcing the move against HSBC.

"We will continue working hand-in-hand with the IRS to enforce the tax laws against those who are using offshore accounts – wherever they are located – to evade taxes."

Earlier this year, prosecutors in New Jersey filed charges against Vaibhav Dahake, claiming that the businessman conspired with bankers of "one of the largest international banks in the world" to hide accounts in India.

The indictment refers to five unnamed bankers who conspired with Mr Dahake: two in New York, one in Fremont, California, and two in Thane, India.

It is alleged that HSBC suggested Mr Dahake open accounts in India to add to those he already held in the British Virgin Islands, and that it helped him shuffle money out of sight of the US tax authorities.

Between 2002 and 2010, HSBC India ran two offices in the US soliciting non-resident Indians to open accounts in the country.

Independent News Service

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