HMRC probes HSBC accounts after data leak

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November 10, 2012 8:42 AM EST

HSBC, Europe's biggest bank, is at the centre of an investigation by British tax authorities into leaked data that a newspaper said showed it provided accounts in the tax haven of Jersey for alleged criminals.

The authorities confirmed they were looking into details of clients in the Channel island after being handed a list of names, addresses and account balances.

"We can confirm we have received the data and we are studying it. We receive information from a very wide range of sources which we use to ensure the tax rules are being respected," HM Revenue & Customs (HMRC) said in a statement.

HSBC said it was investigating the alleged loss of client data, first reported in the Daily Telegraph, "as a matter of urgency".

The Telegraph said some of the clients were convicted criminals or facing criminal allegations.

"We have not been notified of any investigation in relation to this matter by HMRC or any other authority but, should we receive notification, we will cooperate fully with the authorities," the bank said on Friday.

HSBC said it was "fully committed to adoption of the highest global standards including the procedures for the acceptance of clients".

Like all banks, HSBC, which has been criticised by U.S. regulators for lax anti-money-laundering controls in Mexico and elsewhere and last year saw thousands of its Swiss clients probed by the British taxman, is obliged to report to authorities any suspicions about the source of money deposited in its accounts.

The bank's London-listed shares fell 0.33 percent to 600.9 pence on Friday, but outperformed the European banking index, which dropped 1.18 percent.

After the financial crisis, the banking industry around the world is under intense scrutiny over its standards and past practices, which have included mis-selling of financial products and interest-rate rigging. And banks have become caught up in cash-strapped governments' efforts to crack down on tax evaders sheltering money in offshore accounts.

"It feels to me like the banking sector is being seen as a money-stuffed piñata for everyone to have a whack at - be it regulators or governments or consumers," said one of HSBC's 10 biggest investors, who asked not to be named.

"I am very bothered, but is this an HSBC-specific issue? No, I do not think it is. I think that general standards of compliance are being challenged everywhere," the investor said.

CLEAN-UP

Chief Executive Stuart Gulliver has not come under much pressure from investors since the damning U.S. money-laundering report as he took the helm only at the start of 2011. But he acknowledged this week it would take the industry time to clean up the mess from past mistakes.

"There are a whole series of things that came from probably a decade in the 2000 to 2008-09 period that have surfaced now that the industry needs to sort out, remediate, and make sure do not happen again," Gulliver said after setting aside more money on Monday for a potential U.S. fine.

HSBC said earlier this week that the U.S. probe into anti-money laundering failures could result in a fine well over $1.5 billion (943.7 million pounds) and also lead to criminal charges.

The bank also is being investigated by the Internal Revenue Service on issues relating to U.S.-based clients of a bank unit in India and by the IRS and the U.S. Department of Justice on U.S. tax reporting obligations of certain customers, HSBC said in a recent U.S. regulatory filing. It also said it is cooperating in a probe by the U.S. Securities and Exchange Commission over a Swiss private banking affiliate's dealings with U.S. resident clients.

Investors said the U.S. anti-money laundering scandal was a far bigger blow for the bank than a tax investigation would be.

"I do not think it's enough to derail the management. Gulliver is regarded materially more highly than his predecessor," a second top 10 investor in the bank said.

The leaked account data identified 4,388 British-based people holding 699 million pounds in current accounts, and also included celebrities, bankers, doctors, mining and oil executives and oil workers, according to the Daily Telegraph report. It also included about 4,000 account holders with addresses outside Britain.

HSBC's clients came under scrutiny from HMRC last year when the tax authority contacted up to 6,000 Swiss client account holders after getting their details following an exchange agreement with French authorities.

(Reporting by Natalie Huet, Steve Slater, Sinead Cruise, Chris Vellacott and Jed Horowitz; editing by Jane Merriman, Will Waterman and Matthew Lewis)

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