Documents obtained by the International Consortium of Investigative Journalists and the French police, have put the spotlight on HSBC’s Swiss private banking. In particular, their compliance procedures have been put into serious doubt, as staff members of HSBC have advised UHNW clientele about best practice for avoiding paying taxes in their representative countries.[1] With the account details of more than 100,000 individuals and legal entities leaked by proclaimed whistle-blower ‘Hervé Falciani’, the extent the UHNWI’s had gone to protect both their identities and their wealth from the tax-man has been revealed.

In an age where privacy and discretion are amongst the main criteria wanted by UHNWI’s when choosing a private or international bank, what does the recent revelations mean to this community?[2] Firstly it is important to note that tax evasion of any form is illegal, and the data regarding the individuals who have been breaking the law has already been put to use, when the French tax authority shared these documents with representative governments. It is possible that many more individuals will be under scrutiny as more information is released from the files.

Secondly, the recent revelations will spur increased attempts by governments to look at what Thomas Piketty calls “Financial opacity”. That is, a system where UHNWI’s have been able to pay minimal tax rates in countries that they are not domiciled in. Furthermore, a system where UHNWI’s have been able to take advantage of tax loopholes which has led them paying much less tax (such as the European Savings Directive where individuals were advised to transform into corporations to avoid paying the tax).

However, I question the willingness of government officials worldwide to try and implement change in this system, as politicians, amongst entertainers and financiers, are amongst those 100,000 individuals and legal entities caught out in the findings.

Moving forward, HSBC has stated its resolve in exiting clients who “we had concerns in relation to tax compliance”, as such HSBC’s Swiss private bank has reduced its client base by over 70% since 2007. Does that mean that this 70% are now paying the correct amount of tax? I doubt it

Article by Peter O'Flynn

All opinions in this article are the authors own and his alone. To find out more about this story, please visit: http://www.campdenfb.com/article/personal-and-financial-details-leaked-hsbc-swiss-private-bank-revelations

[1] http://www.icij.org/project/swiss-leaks/banking-giant-hsbc-sheltered-mur...

[2] To find out more, visit www.globalfamilyofficereport.com