Over 1000 Germans face HSBC tax prosecutions

Tax investigators are working their way through the files of 2,106 people with links to Germany revealed to have had secretive accounts with the Swiss branch of HSBC by leaks on Monday.

Over 1000 Germans face HSBC tax prosecutions
Photo: DPA

The Süddeutsche Zeitung reported on Monday that around one-third of the German customers used anonymized numbered accounts, while around 200 used shell companies to do business with the bank.

Germans had a total of around €3.3 billion stashed away in HSBC's vaults, with the average deposit standing at more than €1.5 million.

But data published on the website of the International Consortium of Investigative Journalists (ICIJ) showed that the largest client at the bank had assets of around €1.75 billion.

Investigators have already checked through 1,136 of the clients unveiled by the leaks, but French authorities are believed to have almost 1,000 more names of people with links to Germany.

When they first checked the files, French investigators found that only six of the 3,000 accounts held by their citizens were reported to the tax authorities – a situation likely to be repeated in Germany.

While there are legitimate uses for Swiss bank accounts, the files have shown that many clients used the bank to stash money out of reach of the taxman, travelling to Switzerland to make cash withdrawals rather than make potentially traceable money transfers to their home countries.

Among the bank's worldwide clients were alleged weapons dealers, traders in blood diamonds and people close to Al-Qaeda.

Information about the bank's clients was passed to French authorities in 2008 by Hervé Falciani, a former IT worker at HSBC turned whistleblower.

He initially handed the bank details to French Finance Minister Christine Lagarde, meaning that it has often been referred to as the "Lagarde List".

But over 140 journalists from Le Monde, The Guardian, Süddeutsche Zeitung, ICIJ, and German broadcasters NDR and WDR have had access to the files since September 2014.

"The Swiss private bank of HSBC began a radical transformation in 2008, to protect its services from being exploited for tax avoidance or money laundering," HSBC Swiss branch boss Franco Morra said in a statement on Monday.

He added that 70 percent of the bank's accounts had been closed during this process, with none remaining open for American citizens since 2010.

By current estimates, more than €1 billion in taxes and fines could be collected in the twelve countries which currently have access to the files.

SEE ALSO: Bond meets Snowden: the HSBC whistleblower

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German online bank N26 shutters US service

German online bank N26 said Thursday it was closing its operation in the United States next year, as regulators in Europe place the "fintech" start-up under increased scrutiny.

The N26 logo on a bank card.
The N26 logo on a bank card. Photo: picture alliance/dpa | Christophe Gateau

N26’s 500,000 customers in the US would be able to use their services until January 11th, 2022, the bank said in a statement, after which it would cease to operate in a market it first entered in 2019.

Instead the Berlin-based operation would “sharpen its focus on its European business”, where it already operates in 24 countries and is exploring expansion into more eastern European markets.

N26 said it would also look to launch new “investment products in the coming year” to sit along side its current account service.

Founded in 2013, N26 offers free, online-only banking services to around seven million clients and is one of Germany’s most high-profile financial technology or “fintech” firms.

In October, the bank raised $900 million from private investors, and announced a plan to hire a further 1,000 employees to reinforce its product development, technology and cybersecurity teams.

READ ALSO: German online bank N26 to create 1,000 jobs

At home, N26 has been in the crosshairs of the German banking watchdog BaFin since 2018 after a local news media investigation found that it was possible to open account with forged IDs.

Earlier in the month, the regulator said it was upping its oversight operations at N26, appointing a special representative to monitor the bank’s progress towards solving issues in “risk management with regard to IT and outsourcing” identified by BaFin.

The regulator also limited the number of new customers N26 could take on to 50,000 a month until the shortcomings were addressed.

N26 was already being monitored by BaFin over failures in the start-up’s anti-money laundering system.

BaFin issued N26 with a 4.25-million-euro ($4.8-million) penalty earlier this year in connection with around 50 “suspicious transactions” the bank failed to report promptly enough.