Banking giant HSBC could face prosecution in the U.S. for tax evasion relating to its Swiss subsidiary’s alleged role in helping wealthy clients conceal money from the IRS, despite a prior settlement with U.S. prosecutors over criminal charges, attorney general nominee Loretta Lynch said.
Lynch, in written answers to members of the Senate judiciary committee, said the Department of Justice could still bring charges as the earlier settlement was over separate failings at the bank — namely sanctions busting and money-laundering. That deal in 2012 — which Lynch, then U.S. attorney for the eastern district of New York, oversaw — resulted in HSBC admitting wrongdoing and agreeing to a fine of $1.9 billion.
In a letter to Republican senator for Iowa Charles Grassley, who serves as chairman of the judiciary committee, Lynch noted that the deferred prosecution agreement (DPA) reached with HSBC on that occasion “addresses only the charges filed in the criminal information, which are limited to violations of the Bank Secrecy Act for failures to maintain an adequate anti-money laundering program and for sanctions violations.”
She added: “The DPA explicitly does not provide any protection against prosecution for conduct beyond what was described in the statement of facts.”
The comments were made in a letter dated Monday, the same day that it was reported that HSBC's Swiss private bank helped hide vast sums of cash for drug traffickers, arms dealers, celebrities and a king, among others.
Based on leaked documents, the International Consortium of Investigative Journalists (ICIJ) and several news organizations reported that the subsidiary turned a blind eye to the illegal activities of clients.
Covering the period up to 2007, the alleged tax evasion relates to accounts worth $100 billion held by more than 100,000 people and legal entities from 200 countries.
Some details of the alleged operations had been previously disclosed in the 2012 prosecution. But Monday’s leaked information disclosed a more detailed cache of data and information.
In light of the latest reports, HSBC stressed that the documents were from eight years ago and said that it has since implemented numerous initiatives designed to prevent its banking services from being used to evade taxes or launder money.
Franco Morra, CEO of HSBC's Swiss subsidiary, said that the new management had overhauled the business and shut down accounts from clients who "did not meet our high standards."
Al Jazeera and wire services