HSBC unit faces fraud charges in Argentina

Banking group accused of helping private companies evade tax and launder money

PUBLISHED : Wednesday, 20 March, 2013, 12:00am
UPDATED : Wednesday, 20 March, 2013, 4:35am

Argentina's regulatory agency has filed criminal charges against the local unit of HSBC for helping private companies evade tax and launder money.

Ricardo Echegaray, the director of Argentina's federal tax agency AFIP, said a six-month investigation revealed evidence that several companies evaded taxes amounting to 224 million pesos (HK$339.27 million) and laundered 392 million pesos under fraudulent transactions through HSBC Argentina, Reuters reported, citing a news conference in Buenos Aires.

The AFIP filed a complaint last month over alleged irregularities detected in the past three years. It said it hoped to recover its dues and looked forward to seeing the courts penalise the guilty parties.

HSBC executives had secured fake receipts from local companies to aid illicit transactions, the agency said.

A spokesman for the bank said in a statement: "The allegations made by regulators in Argentina are of great concern and we are committed to working co-operatively with the authorities to ensure a thorough review and appropriate resolution of the matter."

Despite the news, shares in HSBC edged 0.36 per cent higher at HK$84.45 in Hong Kong yesterday, while the stock rose 0.12 per cent to 721 pence (HK$84.53) in early London trading.

The tax agency is also investigating other banks that might be involved in tax evasion and money laundering.

Argentina's financial crimes agency, UIF, fined HSBC - one of the top 10 lenders in the country by deposits - almost 32 million pesos last year for not reporting suspicious transactions.

HSBC chief executive Stuart Gulliver said last month that the bank's complex structure and vast geographic footprint had made it attractive to criminal organisations. Since taking the top job in 2011, he has centralised operations to take control out of the hands of regional managers.

Last year, HSBC agreed to pay US$1.92 billion in fines to settle US probes of money laundering and drug charges in countries including Mexico and Syria.

It acknowledged it failed to check money laundering and conduct basic due diligence on some of its account holders.

Another British bank fined in the United States is Standard Chartered, which agreed to pay US$667 million to settle regulators' claims that it helped launder money and created false records for its Iranian clients.