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A report prepared by the Washington-based International Consortium of Investigation Journalists (ICIJ) last week revealed HSBC taking advantage of the Swiss banking system which allows depositors to hide their identities and in many cases evade taxes or launder illegal cash.
According to the report, depositors ranged from royal families, convicted cocaine dealers, ambassadors, entertainers, elected officials, corporate executives to athletes. HSBC is known to actively structure its client accounts as an efficient way to hide assets from tax collectors.
The ICIJ report gave a comprehensive list of accounts associated with 106,000 people and legal entities from 203 countries around the world, altogether worth more than $100 billion in assets. Among them, 26 accounts were associated with Vietnam.
These accounts are worth a total of $37.5 million; three of the account holders bear Vietnamese nationality or held Vietnamese passports and one of them had $12 million in his or her account, equivalent to VND252 billion. However, it remains unclear as to how the remaining clients are associated with Vietnam.
A leader of the SBV’s Anti-Money Laundering Department issued a statement in which he shared that the authority has requested HSBC Vietnam to report the case and verify the 26 relevant accounts. In addition, the authority will also scrutinise each individual account to assess their legality.
HSBC Vietnam, in its official response to SBV’s request, stated the incident revolves around a case of theft of data in one of HSBC’s private banking units, taking place a few years ago, and that it did not affect those that are not customers of the bank.
"HSBC's customers can be assured that the bank has been implementing the necessary measures so that similar situations will not occur again," the HSBC representative stressed.
HSBC, in a written response to the ICIJ report, said its compliance efforts had been insufficient. It pointed out that the bank had undergone a radical transformation since 2007 and now enforced far more stringent reporting requirements.
According to Reuters, HSBC’s Swiss private bank lost $291 million in 2013, the latest published annual results, and scraped together a mere $14 million profit in the first-half of 2014. HSBC is due to release the 2014 results on February 23.
The Swiss branch's profits have fallen monotonously every year since 2008, when they peaked at $553 million and represented 6 per cent of HSBC's total earnings.
The same year HSBC said it began a radical transformation of its Swiss private bank to prevent it from being used for tax evasion or money laundering. Swiss-based banks have been under fire for helping clients avoid taxes for several years, prompting a crackdown across the sector.