Credit Suisse and HSBC, two of the world’s largest wealth managers, dismissed on Tuesday suggestions that they were actively using offshore structures to help clients cheat on their taxes.
Their comments came a day after the Mossack Fonseca leaks showed widespread use of those instruments by global banks on behalf of their clients and triggered a raft of government investigations across the world.
Credit Suisse CEO Tidjane Thiam, who is aggressively targeting Asia’s wealthiest for growth, said his bank was only after lawful assets. “We as a company, as a bank only encourage the use of structures when there is a legitimate economic purpose,” Thiam, who took the helm at Switzerland’s second-largest bank last year, told a media briefing.
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Separately, HSBC said the documents pre-dated a thorough reform of its business model. “The allegations are historical, in some cases dating back 20 years, predating our significant, well-publicised reforms implemented over the last few years,” said Gareth Hewett, a Hong Kong-based spokesman for HSBC.
HSBC and Credit Suisse were named among the banks that helped set up complex structures that make it hard for tax collectors and investigators to track the flow of money from one place to another, according to International Consortium of Investigative Journalists, which based its reports on the leaked documents from the Panamanian law firm, Mossack Fonseca.
More than 500 banks, their subsidiaries and branches registered nearly 15,600 shell companies with Mossack Fonseca, according to ICIJ’s analysis of the records.
The vast majority of them were created since the 1990s, ICIJ said on its website.
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Thiam, in Hong Kong to attend Credit Suisse’s annual Asian Investment Conference, acknowledged the Swiss wealth manager does use offshore financial structures, but only for very wealthy customers with assets in multiple jurisdictions, and it did not support their use for tax avoidance or allow them without knowing the identities of all those concerned.
“We do not condone structures for tax avoidance,” he said.
“Whenever there is a structure with a third party beneficiary we insist to know the identity of that beneficiary.” Credit Suisse agreed in May 2014 to pay a $2.5 billion fine in the United States for helping rich Americans evade taxes.
Several Swiss-based wealth managers, including cross town rival UBS Group AG, also had to pay large fines in the US for the same reason.