HSBC appears headed for a criminal court in France, where prosecutors are seeking to try the banking giant for helping rich clients evade taxes, a judicial source told AFP Friday.
Confirming information published by French daily Le Monde, officials said prosecutors in Paris have motioned to take HSBC's Swiss affiliate to trial on evidence it helped French account holders hide money in 2006-07 that otherwise would have been taxed.
Though this marked a significant development towards probable trial, HSBC's Swiss affiliate said in a statement that the prosecutors' motion "is a normal step in the judicial procedure and the outcome of the case is not determined today."
The move came in the wake of SwissLeaks investigations by international papers -- led by Le Monde -- using stolen documents supplied by former HSBC IT employee Herve Falciani.
That data indicates the bank helped over 120,000 clients to hide 180.6 billion euros from tax authorities.
Those revelations came among growing evidence that pledges by banks to halt illicit or irresponsible activities that led up to the 2008 financial crisis have not been fulfilled.
"In reading the (findings), nobody could doubt the fact that auto-regulation promised by banks, notably HSBC, has utterly failed," William Bourdon, Falciani's French lawyer told AFP.
- 'Money laundering industry' -
"The very serious investigation by (authorities), aided a great deal by the exceptional revelations from Herve Falciani, has uncovered a veritable money laundering industry built on the organised and structured recruitment of French clients," Bourdon said.
According to the investigations into Falciani's whistle-blowing data, HSBC allegedly arranged for more than five billion euros ($5.2 billion at current rates) to be tucked away in trusts, shell companies and offshore accounts for around 9,000 French clients.
Following acknowledgements last month by the British bank that "we sometimes failed to live up to the standards the societies we serve rightly expected from us," authorities in Switzerland raided HSBC's Swiss affiliate -- through which most of the hidden funds was thought to have transited.
An official close to the case said investigating magistrates leading the French inquiry obtained evidence indicating HSBC "benefitted from proceeds of financial fraud and, in organising the obscuring of financial flows, laundered funds of illicit origins, allowing thousands of clients holding large accounts to hide them from the French tax administration."
The request to take the case to trial follows failure of a plea bargaining deal between prosecutors and HSBC, which refused to pay the fine being sought, the source close to the inquiry said.
In certain instances, fines in plea bargaining arrangements can represent half of total sums believed to have been involved in illegal activities.
Several legal investigations into HSBC's Swiss unit are underway in Europe, including Spain and Belgium.