At the annual general meeting of HSBC Holdings plc in London, Group Chairman Douglas Flint said the world is moving toward “greater transparency and fuller disclosure, which we welcome.”
Europe is leading the world toward more transparency, Flint said, and the effort “has to be taken seriously.”
His remarks were reported by the bank in its Form 6-K (Report of Foreign Private Issuer) filed with the SEC on April 22.
Flint said “the circumstances alleged in the Panama Papers with regard to HSBC are largely historical, in some cases dating back 20 years, and so predate the tough financial crime, regulatory compliance and tax transparency standards which HSBC has put in place in recent years.”
Issues in its Swiss Private Bank had already caused HSBC to enforce more transparency and fuller disclosure, Flint said.
“As we reported last year, portfolio disposals together with our insistence on transparency and a lower risk appetite have driven a significant reduction in our client base,” he said.
In early April, the Washington-based International Consortium of Investigative Journalists started publishing the Panama Papers — more than 10 million records from the Mossack Fonseca law firm, naming more than 200,000 anonymous offshore companies the firm formed for clients around the globe.
In late April, Tracey McDermott, the acting chief executive of the FCA, told parliament her agency had written to 64 firms in connection with the Panama Papers.
London-based National Westminster Bank and its corporate parent, The Royal Bank of Scotland Group based in Edinburgh, said in separate U.S. securities filings the FCA asked for information about any relationship the banks had with Mossack Fonseca or with any individuals named in media coverage about the Panama Papers.
Last week the International Consortium of Investigative Journalists (ICIJ) launched a searchable database that used the Panama Papers to index 320,000 offshore companies and the people behind them.
The U.S. and UK have announced steps to restrict the use of anonymous companies.
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. It has assets of $2.4 trillion, making it one of the world’s biggest banks.
It serves customers through about 6,000 offices in 71 countries in Asia, Europe, North and Latin America, and the Middle East and North Africa.
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HSBC Group Chairman Douglas Flint said:
The so-called Panama Papers have highlighted once again how perfectly legal corporate structures can be abused to facilitate money laundering and tax evasion or to obscure ill-gotten gains.
Let me tackle upfront how we are addressing the issues and concerns that have been highlighted. We have already made great strides to enforce transparency and full disclosure as a consequence of the issues we have been dealing with in our Swiss Private Bank. As we reported last year, portfolio disposals together with our insistence on transparency and a lower risk appetite have driven a significant reduction in our client base.
While there are lessons to be learned from the revelations, the circumstances alleged in the Panama Papers with regard to HSBC are largely historical, in some cases dating back 20 years, and so predate the tough financial crime, regulatory compliance and tax transparency standards which HSBC has put in place in recent years.
We are moving steadily into a world of greater transparency and fuller disclosure, which we welcome. We fully anticipate that we will continuously work to improve how we are handling financial crime compliance — this is the only way to counter the ever-evolving methods of those who seek to exploit our systems and circumvent our controls. We are taking steps to align our customer base with these higher standards relinquishing clients unable or unwilling to furnish full transparency of their affairs. We are committed to working with the relevant public authorities to fight financial crime and keep criminals out of the financial system.
As you will have seen Europe is taking a lead in this area, leveraging the attractiveness of its markets to enforce transparency elsewhere — as such it has to be taken seriously.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He’ll be the keynote speaker at the FCPA Blog NYC Conference 2016.
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