Armed with "sufficient evidence", Indian tax authorities have issued notices to global banking giant HSBC, warning of prosecution against its Swiss and Dubai arms for allegedly abetting tax evasion by four Indians and their families.
The UK-based HSBC, which also disclosed on Monday ongoing probes by tax authorities from various countries in connection with alleged abetment of tax evasion and money laundering through its Geneva branch, said it is cooperating with the relevant authorities and cautioned of "significant" financial impact as a result of these investigations.
HSBC has been under scanner ever since a leaked list of hundreds of Indian clients of its Geneva branch found its way to Indian tax authorities. Similar lists made their way to tax authorities in various other countries, prompting probes.
Indian government has stepped up its fight against black money, allegedly stashed in Switzerland, in recent years and there have been apprehensions that the so-called illicit wealth might have been shifted to other places such as Dubai.
Without disclosing the names of Indians who indulged in the alleged tax evasion through its Swiss or Dubai units, HSBC said while announcing its annual results that it had first been issued summons in February 2015 from Indian tax authorities, while fresh notices were issued in August and then in November.
The bank on Monday reported a revenue of $1.84 billion from India in 2015, up from $1.74 billion in 2014. Its profits from India operations stood at $606 million, largely from global banking and market businesses. For India, its customer accounts had balance of $11.8 billion at the end of 2015, up from $11.7 billion in the previous year.
"In India, in February 2015, the Indian tax authority issued summons and request for information to an HSBC company in India. In August 2015 and November 2015, HSBC entities received notices issued by two offices of the Indian tax authority, alleging that the Indian tax authority had sufficient evidence to initiate prosecution against HSBC Swiss Private Bank and its Dubai entity for abetting tax evasion of four different Indian individuals and/or families and requesting that the HSBC entities show why such prosecution should not be initiated," the bank said.