Swiss Leaks (or SwissLeaks ) is a journalistic investigation, released in February 2015, of a giant tax evasion scheme allegedly operated with the knowledge and encouragement of the British multinational bank HSBC via its Swiss subsidiary, HSBC Private Bank (Suisse) . Triggered by leaked information from French computer analyst Hervé Falciani on accounts held by over 100,000 clients and 20,000 offshore companies with HSBC in Geneva , the disclosed information was then called "the biggest leak in Swiss banking history".
31-499: Investigators allege that 180.6 billion euros passed through HSBC accounts held in Geneva by over 100,000 clients and 20,000 offshore companies between November 2006 and March 2007. The data for this period comes from files removed from HSBC Private Bank by a former staffer, software engineer Hervé Falciani , who fled to Lebanon with the attempt to sell it. Later he handed it to French authorities in late 2008. In December 2008, Falciani
62-428: A number of high-profile companies have ceased using offshore entities in their group structure as a result of public campaigns for such companies to pay their "fair share" of Government taxes. Detailed information in relation to the use of offshore companies is notoriously difficult to come by because of the opaque nature of much of the business (and because, in many cases, the companies are used specifically to preserve
93-498: A search of Falciani's father's home, where he had been staying. The Nice prosecutors began examining the files Falciani and decided that they were of relevance to France's interest, and refused the Swiss extradition request. The data, some 600 files with a total size over 100 GB, took time to analyze, but French authorities were assisted by Falciani. By early 2010, French tax authorities had begun notifying other countries' tax officials about
124-457: Is subject both the U.S. taxation and to financial regulation by the U.S. Securities and Exchange Commission . Another common characteristic of offshore companies is the limited amount of information available to the public. This varies from jurisdiction to jurisdiction. At one end of the scale, in the Cayman Islands and Delaware, there is virtually no publicly available information. But at
155-418: Is used in at least two distinct and different ways. An offshore company may be a reference to: The former use (companies formed in offshore jurisdictions) is probably the more common usage of the term. In isolated instances, the term can also be used in reference to companies with offshore oil and gas operations. In relation to companies and similar entities which are incorporated in offshore jurisdictions,
186-728: The British Virgin Islands , but the model was copied widely. However, in the early 2000s the OECD launched a global initiative to prevent "ring fencing" of taxation in this manner, and many leading jurisdictions (including the British Virgin Islands and Gibraltar ) repealed their International Business Companies legislation . But IBCs are still incorporated in a number of jurisdictions today including Belize, Seychelles, BVI Anguilla and Panama . Separately from IBCs, there are countries which operate tax regimes which broadly achieve
217-839: The International Consortium of Investigative Journalists (ICIJ) website released information about bank accounts in Switzerland under the title Swiss Leaks: Murky Cash Sheltered by Bank Secrecy, which involves the Swiss Leaks Project , a website containing almost 60,000 leaked files that provide details on over 100,000 HSBC clients and their bank accounts. The Swiss Leaks Project's investigations revealed that HSBC's Geneva branch, ignoring these rules, helped people accused of drug-running, corruption, money-laundering or arms-dealing conceal billions of dollars in Switzerland. Among
248-566: The Netherlands and particularly the United Kingdom , in commentary relating to corporate inversion and the use of British Overseas Territories for this purpose. Furthermore, in Federal systems, states which operate like a classic offshore centre can result in corporations formed there being labelled as offshore, even if they form part of the largest economy in the world (for example, Delaware in
279-536: The United Kingdom operates on broadly similar principles in relation to taxation of companies. Separately, there are offshore jurisdictions which simply do not impose any form of taxation on companies, and so their companies are de facto tax-exempt. Historically the best example of these countries were the Cayman Islands and Bermuda , although other countries such as the British Virgin Islands have now moved to this model. These could arguably fit into either of
310-483: The United States ). Historically, offshore companies were broadly divided into two categories. On the one hand were companies which were statutorily exempt from taxation in their jurisdiction of registration, provided that they did not undertake business with persons resident in that jurisdiction. Such companies were usually called International Business Companies , or IBCs. Such companies were largely popularized by
341-642: The 66 names revealed by the Swiss Leaks investigation are: The top 10 countries involved, in terms of dollar amounts and number of clients in leaked Swiss files, are shown in the tables below. By July 2021, the Government of India identified undeclared assets worth of about ₹ 8,465 crore (equivalent to ₹ 95 billion or US$ 1.1 billion in 2023) following the investigation and levied ₹ 1,294 crore (equivalent to ₹ 15 billion or US$ 170 million in 2023) in tax penalty. In March 2015,
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#1732851024619372-516: The 72 originally up for prosecution). Five days earlier, HSBC itself had been charged in France for complicity in concealing fiscal fraud and illegal selling via its Swiss branch. According to the International Consortium of Investigation Journalists ( ICIJ ), which treated the data of the Swiss Leaks, Morocco is concerned by $ 1.6 billion of tax evasion and stands at thirty-seventh place of
403-612: The French financial state prosecutor has requested that HSBC's Swiss private bank be sent to criminal trial over the suspected tax-dodging scheme for wealthy customers. The recommendation follows a lengthy investigation by local magistrates into alleged tax fraud involving 3,000 French taxpayers and is a procedural step that brings the Swiss banking arm one step closer to a possible trial in France. In November 2017, HSBC has agreed to pay 300 million euros ($ 352 million) to avoid going to trial in France for enabling tax fraud. The deal struck between
434-453: The OAC must have a representative (registered agent) and office address (registered office) in the county of the incorporation. (4) The OSC must be managed and governed by (an employee of) a local trust or law office. (5) There is an instance of elements that benefit anonymity such as bearer shares and no or limited filing obligations. Although all offshore companies differ to a degree depending upon
465-513: The affected countries. Morocco stands at twenty-third place for the number of clients (1068). The maximal amount of tax evasion for one client was $ 74.1 million and the average was $ 1.5 million. As stated in the Moroccan law, it is strictly forbidden to have a foreign bank account. But the documents revealed that the royal family were part of the HSBC clients. Prince Moulay Rachid was touched by this scandal,
496-451: The common themes, a number of jurisdictions have also enacted special corporate provisions to try to attract business through offering corporate mechanisms that allow complex business transactions or reorganisations to occur more smoothly. Offshore companies are used for a variety of commercial and private purposes , some legitimate and economically beneficial, whilst others may be harmful or even criminal. Allegations are frequently made in
527-502: The confidentiality of a transaction or individual). It is a commonly held view that most uses of offshore companies are driven by tax mitigation and/or regulatory arbitrage , although there are some suggestions that the amount of tax structuring may be less than commonly thought. Other commonly cited legitimate uses of offshore companies include uses as joint ventures financing SPVs , stock market listing vehicles, holding companies and asset holding structures, and trading vehicles. In
558-467: The corporate law in the relevant jurisdiction, all offshore companies tend to enjoy certain core characteristics: The absence of taxation or regulation in the home jurisdiction does not exempt the relevant company from taxation or regulation abroad. For example, Michael Kors Holdings Limited is incorporated in the British Virgin Islands, but is listed on the New York Stock Exchange , where it
589-607: The files. In April 2015, Nina Ricci 's heir, Arlette Ricci, was convicted of tax evasion in a Paris court on the basis of the Swiss Leaks files. Ricci was given a three-year prison sentence, two of them suspended, and had real estate in Paris and Corsica seized. She was also assessed a million-euro fine, for showing a "particularly determined willingness" to hide money (some €18m) with the help of HSBC. Some 50 other wealthy French individuals were expected to be brought to court for similar activities (several others having settled out of court, of
620-520: The financial crime prosecutor's office and the bank is a first in France under a new procedure that allows companies under suspicion of corruption or dissimulation of tax fraud to negotiate a fine to stop a case from going to trial. French prosecutors have now dropped the case against HSBC Holdings . BBC reported that HSBC had put pressure on media not to report about the controversy, with British newspaper The Guardian claiming HSBC advertising had been put "on pause" after The Guardian' s coverage of
651-533: The matter. Peter Oborne , chief political commentator at the Daily Telegraph resigned from the paper; in an open letter he claimed the Daily Telegraph suppressed negative stories and dropped investigations into HSBC because of the bank's advertising. CBS published a story about the leaks in its news program 60 Minutes . Offshore company The term "offshore company " or "offshore corporation"
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#1732851024619682-865: The other end of the scale, in Hong Kong companies file annual returns with particulars of directors, shareholders and annual accounts. However, even in jurisdictions where there is relatively little information available to the public as of right, most jurisdictions have laws which permit law enforcement authorities (either locally or from overseas) to have access to relevant information, and in some cases, private individuals. In relation to flexible corporate law , most offshore jurisdictions will normally remove corporate fetters such as thin capitalisation rules, financial assistance rules, and limitations on corporate capacity and corporate benefit . A number have also removed or watered down rules relating to maintenance of capital or restrictions on payment of dividends . Beyond
713-503: The press about offshore companies being used for money laundering , tax evasion , fraud , and other forms of white collar crime . Offshore companies are also used in a wide variety of commercial transactions, from generic holding companies, to joint ventures and listing vehicles. Offshore companies are also used widely in connection with private wealth for tax mitigation and privacy. The use of offshore companies, particularly in tax planning , has become controversial in recent years, and
744-579: The previous two categories, depending on the fiscal point of view involved. To the Offshore Company definition, applies five (non-cumulative) limiting conditions: (1) The government in the country of incorporation does not levy an indirect tax on the OAC (however, the OSC must pay an annual fee to the government). (2) Separate laws and regulations apply. (3) The OSC doesn't have its own physical office (address), personnel, means of communication etc. This means that
775-518: The princess Lalla Meryem and the current king Mohammed VI with an amount $ 9.1 million hidden in the HSBC bank. Given the scale of the investigation, Le Monde called upon 154 journalists affiliated with 47 different media outlets including: The Guardian , CBS , Süddeutsche Zeitung , and The Indian Express , among others, to help analyze the data. The International Consortium of Investigative Journalists ( ICIJ ) has been coordinating this international collaborative effort. In February 2015,
806-703: The private banking business of HSBC Trinkaus & Burkhardt AG (operating as HSBC Trinkaus ) known collectively as Global Private Banking, provides services to wealthy people and their families through 96 offices in some 43 countries and territories in Europe , the Americas , the Asia-Pacific region, the Middle East and Africa . At 31 December 2008, profits before tax were US$ 1,447 million and combined client assets under management were US$ 352 billion. HSBC Guyerzeller Bank AG
837-450: The same effect: so long as the company's activities are carried on overseas, and none of the profits are repatriated, the company is not subject to taxation in its home jurisdiction. Where the home jurisdiction is regarded as an offshore jurisdiction, such companies are commonly regarded as offshore companies. Examples of this include Hong Kong and Uruguay . However, these tax regimes are not limited to conventional offshore jurisdictions:
868-722: The three-year period from 2017 to 2019, the following jurisdictions saw the following numbers of new company registrations: HSBC Private Bank HSBC Private Bank is the principal private banking business of the HSBC Group . HSBC Private Bank's holding company is HSBC Private Banking Holdings (Suisse) S.A. . The holding company is wholly owned by British HSBC Bank plc and its subsidiaries include HSBC Private Bank (Suisse) S.A., HSBC Private Bank (UK) Limited, HSBC Private Bank (C.I.) Limited, HSBC Private Bank (Luxembourg) S.A., HSBC Private Bank (Monaco) S.A. and HSBC Financial Services (Cayman) Limited. HSBC Private Bank, together with
899-873: The use of both the words "offshore" and "company" can be varied in application. The extent to which a jurisdiction is regarded as offshore is often a question of perception and degree. Classic tax haven countries such as Bermuda , British Virgin Islands and the Cayman Islands are quintessentially offshore jurisdictions, and companies incorporated in those jurisdictions are invariably labelled as offshore companies. Thereafter, there are certain small intermediate countries or areas such as Hong Kong , Singapore and Mauritius (sometimes referred to as "mid-shore" jurisdictions) which, whilst having oversized financial centres, are not zero tax regimes. Finally, there are classes of industrialised economies which can be used as part of tax mitigation structures, including countries like Ireland ,
930-483: Was a subsidiary HSBC Private Bank. In 2009 the HSBC Guyerzeller business was re-branded HSBC Private Bank. In October 2012, HSBC Private Bank sold Property Vision Holdings Limited to PV Acquisition Limited in a 100% management buyout. Property Vision was acquired by HSBC in 2001 and specialises in managing and providing advice on property purchases. Property Vision's exit from HSBC was part of wider restructuring by
961-455: Was detained by Swiss authorities, who questioned him concerning suspected data theft. Released "overnight" by Swiss police, he fled with his family and the data files to France. On 20 January 2009, authorities in Nice initiated the search of the home Falciani's father, where he had been living. On January 20, 2009, the prosecutor’s office in Nice, responding to a request from Swiss authorities, ordered