HSBC has agreed to pay a fine of nearly USD 312.9 million in connection with an investigation into accusations of tax fraud relating to dividend payments.
Following this announcement, French authorities mentioned that the case is expected to be shelved with the payment of the fine.
In response, officials of HSBC have said that the settlement with the French court will focus on finding the corrective measures that need to be taken in order to address the issue, while also prioritising serving its customers.
Addressing the issue and resolving the matter
The investigation related to accusations that HSBC’s French arm between 2014 and 2019 engaged in several trading transactions involving intra-group dividend arbitrage transactions in order to benefit from the exemption of taxes from such transactions, dealings the prosecutor’s office said amounted to ‘aggravated tax fraud’.
This announcement follows CMA’s fine on Citi, HSBC, Morgan Stanley, and Royal Bank of Canada over gilt information sharing. After an investigation into the four financial institutions, the UK’s competition regulator revealed that employees leveraged Bloomberg chat rooms to share sensitive information on gilt trading. The conduct took place between 2009 and 2013, and at the time of the writing, Citi, HSBC, Morgan Stanley, and Royal Bank of Canada agreed to pay the fines totalling over GBP 100 million, with each of them settling separate cases with the CMA.
Regarding HSBC, the bank also received an official warning from the CMA back in January 2023 for failing to provide the correct information about its Open Banking processes and solutions. At that time, the financial institution published several times improper data about charges, rates, and fees, including details about loan eligibility across more than 50 instances. The actions were a direct breach of the PSD2 Open Banking regulatory framework, which also required banks to share services, products, and solutions information accurately via the Open Banking APIs.
