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HSBC tax fraud probe in India: Here's what we know so far

BT Online     February 27, 2017

London-based bank HSBC has been approached by tax authorities in India and several other countries over cases related to tax evasion and money laundering, the bank has disclosed in its annual report published last week.

The global banking giant has acknowledged the fact that the regulatory and law enforcement agencies of various countries contacted the bank for information on persons and entities named in the leaked 'Panama Papers' -- which included hundreds of Indians who had indulged in alleged tax violations through offshore tax havens with the help of Panamanian law firm Mossack Fonseca.

HSBC has said that it has set aside over Rs 5,000 crore($773 million) as a provision for various tax- and money laundering-related matters.

Here are all the key points related to the Indian investigation:

- The Indian tax authority wants to initiate prosecution against HSBC Swiss Private Bank and an HSBC company in Dubai for allegedly abetting tax evasion of four Indian families.

- According to the report, the Indian tax authority have claimed they have sufficient evidence to initiate probe.

- The HSBC annual report says Indian tax authorities in February 2015 had issued summons and request for information to an HSBC company in India.

- Also, two offices of the Indian tax authority sent notices to HSBC companies in August 2015 and November 2015 on the matter.

- HSBC's disclosure on the Indian tax authority's investigation comes after Finance Minister Arun Jaitley informed the Parliament earlier this month that the Government detected over Rs 16,200 crore in black money after investigations on global leaks about Indians stashing funds abroad.

- In the written reply to the Rajya Sabha, Jaitley had also said about Rs 8,200 crore (including protective assessment of income of Rs 1,497 crore) of undisclosed income was brought to tax in the last two years on account of deposits made in unreported offshore accounts in HSBC Bank,

- But this is not just limited to India.  Various tax administrations, regulatory and law enforcement authorities around the world, including in the US, France, Belgium, Argentina, are conducting investigations and reviews of HSBC Swiss Private Bank and other HSBC companies in connection with allegations of tax evasion or tax fraud, money laundering and unlawful crossborder banking solicitation.

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