HSBC to pay 267.5 million euros in France over tax fraud claim

PARIS: British-based bank HSBC has agreed to pay a 267.5 million euro fine to settle French claims over alleged dividend tax fraud, a widespread inquiry targeting several large banks, an AFP reporter confirmed Thursday.

The $312 million deal with French financial prosecutors, which sees the bank avoid further prosecution, was approved by a judge at a Paris court.

The case is part of investigations sparked by a massive fraud carried out for years in several European countries, revealed by a consortium of European news outlets in 2018.


The financial prosecutor's office launched in December 2021 inquiries into six large banks, which a source close to the case confirmed as HSBC, a Credit Agricole unit Cacib, BNP Paribas and its Exane unit, Societe Generale and Natixis.

The fraud, known as "CumCum", involves an investor selling shares to another party just before dividend payment day, to avoid paying taxes, and then immediately repurchasing the shares, with both parties sharing the illicit proceeds.

It was exposed alongside a similar "Cum-ex" dividend tax fraud published by the media consortium in 2018.

Banks are suspected of acting as intermediaries in the practice and even charging a commission to the investors taking part.

"HSBC acknowledges the facts as they have been presented," the bank's representative said during the hearing.

The bank later welcomed the deal, saying it "recognises the bank's cooperation in the inquiry, and the corrective measures taken to rectify the past problems".

Credit Agricole's Cacib was the first to accept a deal with French prosecutors, agreeing to pay 88 million euros in September.

In December 2022, a German court sentenced lawyer Hanno Berger, believed to be the mastermind of the "Cum-ex" scheme, which reportedly siphoned off 140 billion euros over some 20 years, to eight years in prison.