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US government faces pressure after biggest leak in banking history

US government faces pressure after biggest leak in banking history | FCPA | Scoop.it
The US government will come under intense pressure this week to explain what action it took after receiving a massive cache of leaked data that revealed how the Swiss banking arm of HSBC, the world’s second-largest bank, helped wealthy customers conceal billions of dollars of assets.

The leaked files, which reveal how HSBC advised some clients on how to circumvent domestic tax authorities, were obtained through an international collaboration of news outlets, including the Guardian, the French daily Le Monde, CBS 60 Minutes and the Washington-based International Consortium of Investigative Journalists.

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The files reveal how HSBC’s Swiss private bank colluded with some clients to conceal undeclared “black” accounts from domestic tax authorities across the world and provided services to international criminals and other high-risk individuals.

The disclosure amounts to one of the biggest banking leaks in history shedding light on some 30,000 accounts holding almost $120bn (£78bn) of assets. Of those, around 2,900 clients were connected to the US, providing the IRS with a trail of evidence of potential American taxpayers who may have been hiding assets in Geneva.

A trail of evidence
The data was leaked by a computer expert turned whistleblower working in HSBC’s Geneva office. French authorities later obtained the files and shared them with the US Internal Revenue Service in 2010. That year, amid growing scrutiny from US tax authorities, HSBC’s private bank in Switzerland stopped doing business with US residents entirely.

HSBC files: why the public should know of Swiss bank’s pattern of misconduct
Scores of clients of lucrative operation are already under criminal investigation amid claims of their involvement in drug smuggling, frauds and terror financing
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The US Department of Justice and IRS have been investigating HSBC’s Swiss banking operations ever since but the scale of those inquiries remain unclear.

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Confronted by the Guardian’s evidence, HSBC admitted wrongdoing by its Geneva-based subsidiary. “We acknowledge and are accountable for past compliance and control failures,” the bank said in a statement. The Swiss arm, the statement said, had not been fully integrated into HSBC after its purchase in 1999, allowing “significantly lower” standards of compliance and due diligence to persist.

HSBC added: “Beginning in 2008 HSBC began to put a more rigorous control structure in place in the Swiss private bank by, for example, introducing a new policy on US persons and reducing the number of US taxpayer accounts. In 2010, the Swiss private bank decided to exit US resident client business entirely.”

However the Swiss files, made public for the first time by the Guardian and other media, are likely to raise questions in Washington over whether there is evidence to prosecute HSBC or its executives in the US. Lawmakers are also expected to question the rigour of IRS investigations into undeclared assets hidden by US taxpayers in Geneva.
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Center for Audit Quality Releases 'Fighting Fraud' Video | AccountingWEB

Center for Audit Quality Releases 'Fighting Fraud' Video | AccountingWEB | FCPA | Scoop.it
In "Fighting Fraud," a new video created by the Center for Audit Quality (CAQ), external auditor Ledger Lines asks, "What makes an honest Joe become a fraudster?"

"Financial reporting fraud has a profound negative impact on investors' confidence in public companies and the capital markets," said CAQ Executive Director Cindy Fornelli. "The CAQ's new video explains how members of the system of investor protection work to mitigate the conditions that can lead to fraud and protect investors by working to ensure the integrity of financial information released by public companies." The video explains the responsibilities of audit committee members, financial executives, internal auditors, and external auditors to lower the risk of financial reporting fraud. Lotta Charts helps set a strong and ethical tone at the top of the company. Ledger Lines must exercise professional skepticism when assessing audit evidence. Indy Pendent oversees the financial reporting process and makes sure that whistleblower reports on financial reporting fraud are carefully evaluated. Ida Figures assesses the company's fraud risk management and testing controls to see if they work as intended.

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