A financial prosecutor is looking into tax fraud and money laundering at five French banks
Five bank headquarters in Paris were being searched by France's financial prosecutor as part of an international investigation into tax evasion and money laundering, according to officials Tuesday.
Societe Genereale, HSBC Holdings Plc, BNP Paribas SA, and Natixis were among the banks raided this morning that are at the center of the investigation.
The investigation focuses on alleged cum-cum transactions. In some cases, just before the dividend is paid, a domestic bank acquires a foreign investor's interests in a company. It can then make use of a tax advantage that the foreigner is not eligible for.
More than 150 investigators are working on the case, together with six Cologne-based German prosecutors.
The investigation might lead to fines against the banks totaling up to €1.1BN.
According to a statement from France's National Financial Prosecutor's Office (PNF), the inquiry focuses on banks that are situated in Paris and the financial neighborhood of La Defense.
The HSBC Holdings Plc, BNP Paribas SA, and Natixis searches were verified by the French financial prosecutor's office through email, and SocGen separately confirmed that it was a part of the investigation.
According to the PNF, these operations "ntervene in the context of five preliminary investigations opened on 16 and 17 December 2021 on the count of aggravated laundering of aggravated tax fraud, and for some of aggravated tax fraud, relating to the so-called ‘CumCum’ fraud scheme, a tax combination on dividends."
The public prosecutor added that "The ongoing operations, which required several months of preparation, are conducted by 16 PNF magistrates and more than 150 investigators from the Financial Judicial Investigation Service (SEJF), in the presence of six German prosecutors from the Cologne Public Prosecutor’s Office intervening in the framework of European judicial cooperation."
Short-sellers and the actual shareholder may both claim tax credits on a dividend that was only paid once thanks to so-called cum-ex transactions, which took advantage of tax law loopholes.
The method used tax certificates issued by the banks serving as the trades' custodians. In 2012, Germany got rid of the controversial regulations.
According to the bank, Societe Generale SA stated that its French headquarters were being searched as part of the investigations.
Le Monde had earlier reported that the inquiry involved HSBC Holdings Plc, BNP Paribas SA, Societe Generale SA, and Natixis; the prosecutor later confirmed this information through email.
In Germany, there has been an ongoing scandal involving the examination of tax-diversion schemes. The nation's prosecutors are also involved in the French probe.
By fLEXI tEAM