Governments are partly to blame for turning a blind eye as banks exploited legal loopholes to stash billions of dollars in Swiss accounts, according to the Commissioner for Revenue, Marvin Gaerty. He was commenting in the wake of revelations showing how HSBC used its Swiss private bank to help clients around the world dodge tax authorities in their own countries.
The revelations known as Swiss Leaks were made by the Washington-based International Consortium of Investigative Journalists (ICIJ). They included information on $687 million held by HSBC for 71 Maltese clients in Geneva. A single Maltese client held $630 million.
Mr Gaerty said the European Services Directive introduced in 2004 only covered individuals and certain financial products. The directive was eventually changed last year to include companies (known in financial jargon as ‘legal persons’).
“These were loopholes everyone knew existed and I am sorry to say governments and the EU are partly to blame because they knew what banks were doing was wrong but possible,” Mr Gaerty said.
He said last year’s changes meant that banks were obliged to know who the ultimate beneficiary and individual owner of an account was.
The European Savings Directive was intended as a tool to counter cross-border tax evasion. It allowed information about foreign resident individuals receiving savings income outside their resident State to be collected and exchanged.But for 10 years it did not cover companies,and the HSBC private bank in Switzerland is accused of having advised clients to avoid taxes by creating companies.
The international group of investigative journalists has cautioned that not all HSBC Swiss account holders have necessarily avoided taxes or used the accounts to deposit ‘dirty’ money.
Mr Gaerty said he would be seeking information from the ICIJ, the Swiss and French authorities and HSBC on the Maltese account holders. “We will then carry out our own investigation to see whether the money was declared and whether taxes were paid.”
The identity of the Maltese HSBC client who holds $630 million in a Swiss account has not been revealed. It is not known whether this particular client is an individual or a company.Mr Gaerty said it was likely the account was linked to an intermediary, who would manage the wealth on behalf of clients.
Sources within the financial services sector said there were a few Maltese individuals who had the potential to amass such wealth but insisted it could very well be that the account belonged to a company registered in Malta.