HSBC Settles with French Authorities Over Tax Fraud Investigation

PARIS, Jan 8 – HSBC has reached an agreement to pay 267.5 million euros (roughly $312.33 million) to the French Treasury as part of a resolution to an inquiry into alleged fraud concerning dividend tax payments. This settlement relates to practices spanning from 2014 to 2019.

The investigation into HSBC is part of a wider probe into dividend tax fraud that has implicated several other domestic banks. Similar investigations are also occurring in Germany and other parts of Europe.

The Paris court approved HSBC’s settlement on Thursday, effectively concluding an investigation that had scrutinized its trading strategies, notably focused on dividend arbitrage, which prosecutors suggested could be construed as tax evasion. Importantly, HSBC maintains that this settlement does not signify an admission of wrongdoing.

In a statement released by HSBC, the bank expressed contentment to have resolved issues linked to certain historical transactions concluded in 2019. They emphasized their cooperation throughout the investigation and the proactive measures taken to rectify past issues.

However, details regarding conditions attached to the settlement or its potential impact on the bank’s financial outcomes were not disclosed.

The prosecutors’ inquiries into HSBC began with suspicions surrounding dividend stripping — a strategy where banks and investors trade shares swiftly around dividend payment times. It’s crucial to note that the HSBC settlement specifically pertains to dividend arbitrage, rather than bulk trading.

The scandal surrounding “Cum-Ex” strategies, which obfuscate share ownership and permit multiple parties to fraudulently claim tax refunds on dividends, has led to investigations and legal actions across Europe.