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French ‘stashed $5 billion in Swiss accounts’

Almost 3,000 wealthy French citizens stashed close to $5 billion in HSBC accounts in Switzerland, according to a parliamentary report in France this week.

French 'stashed $5 billion in Swiss accounts'
Hervé Falciani in Spanish court earlier this year. Photo: Pool/AFP

French business journal Les Echos reported on Thursday the figures come from information leaked to the French government by Hervé Falciani, the former IT worker at the Geneva branch of HSBC Private Bank, a subsidiary of British-based HSBC.

Falciani, who was arrested in 2012 and subsequently released in Spain, where he cooperated with authorities, transmitted a list 127,311 names of potential tax evaders with accounts at HSBC in 2008.

Of these 2,932 individuals and “legal entities” are resident in France.

Switzerland has issued a request to extradite Falciani, who faces charges of violating Swiss banking secrecy laws, but he is now under police protection in France, where is also cooperating with authorities.

Earlier this month he testified behind closed doors to a French parliamentary committee.

Citing a report from French Socialist MP Christian Eckert on the Falciani list, Les Echos totted up the numbers and came up with the figure of almost $5 billion in assets held in HSBC accounts in Switzerland.

But only one in six of the French account holders declared their assets to tax authorities and only a quarter of the assets have been properly reported or “regularized”, the journal reported.

French tax authorities have so far only recovered €186 million ($242 million) in owed taxes and penalties from the HSBC account list.

"The case of the HSBC list has shed light on the weaknesses in our legal arsenal in the fight against systematic tax fraud," lawmaker Christian Eckert wrote in the report on behalf of the National Assembly's finance committee.

The Eckert report highlights that just one percent of French individuals or companies accounted for $1.75 billion of the assets in the Swiss accounts.

The report notes that 169 of HSBC’s 1,293 employees at the time when the information was initially leaked were residents of France, Les Echos said.

“It is probable that employees held accounts to the benefit of clients and played the role of front-man,” the report says.

In certain cases, the assets of employees exceeded 100 million francs, up to 500 million francs, Les Echos said.

In his report, Eckert denounced the slowness with which French tax authorities have dealt with the information from the Falciani list after launching a preliminary investigation in 2009.

The list contains tens of thousands of suspected tax evaders from around the world, including the UK, Spain, Germany and Greece.

Article written by Malcolm Curtis

This article first appeared on The Local Switzerland. It can be viewed by clicking HERE

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TAX EVASION

Switzerland’s banks remain among the world’s most secretive

Despite the progress made over the years, the Swiss financial sector continues to be one of the least transparent in the world. But there is good news too.

Switzerland’s banks remain among the world’s most secretive
Switzerland remains one of the world's least transparent nations. Photo AFP

Switzerland is in the third place in the 2020 Financial Secrecy Index released by the non-governmental organisation (NGO) Tax Justice Network (TJN), which rates 133 nations based on their financial transparency.

Two other European countries, Luxembourg and the Netherlands, are also ranked among the top 10 least transparent nations on the TJN’s list.

Despite being in the third place, Switzerland ranks better this year than it did in the previous edition of the Index, which is released every two years — it slipped from the first to third place. The Cayman Islands and the United States took the first and second spots, respectively.

Switzerland reduced its risk of being an offshore haven for tax cheats by 12 percent, “finally improving enough to move off the top of the index”, TJN said. 

READ MORE: Switzerland's strangest taxes – and what happens if you don't pay them

This improvement is mainly due to Switzerland extending its international network for the automatic exchange of customer information to more than 100 countries. 

Also, in a referendum held last year, Swiss voters accepted the Federal Act on Tax Reform and AVS Financing (TRAF). This legislation introduced major changes in the Swiss tax system by ending some preferential tax schemes and replacing them with new regulations which are in line with international standards.

This tax reform prompted the European Union to change Switzerland's status from ‘tax haven' to one which is EU-compliant, removing strict controls on transactions within the EU. 

So why, despite all the reforms, does Switzerland still rank among the world’s least transparent nations?

According to a Swiss NGO Alliance Sud, wealthy people from poor countries can still hide their money here from the tax authorities of their home nations.

Alliance Sud noted that despite the progress made in the past years by Swiss financial institutions, “the fight against tax evasion remains insufficient”.

Switzerland is the world’s biggest centre for managing offshore wealth, with a quarter of global assets invested here.

For years, it has been placed on various lists of tax havens where wealthy foreigners could park their money. Faced with widespread criticism for this practice, Switzerland passed an anti-money laundering law in 1997 and introduced strict regulations against tax evasion.
 

 

 
 

 

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