France enforcement: HSBC pays €300 million for first DPA
Tuesday, November 28, 2017 at 8:28AM
Richard L. Cassin in Deferred Prosecution Agreement, France, Herve Falciani, Sapin II

The Geneva-based private banking unit of HSBC entered into France's first deferred prosecution agreement Tuesday under the country's new anti-corruption regime.

HSBC helped French clients evade local taxes and launder money, the DPA said.

The bank agreed to pay €300 million ($356 million) to resolve the offenses through the DPA. That amount includes disgorgement of €86.4 million ($102.9 million) in profit.

The DPA was entered into by the French National Financial Prosecutor and HSBC Private Bank (Suisse) SA.

The bank's ultimate parent -- London-based HSBC Holdings plc -- guaranteed payment of the penalties within ten days.

In 2008, a former employee in the bank's IT group, Herve Falciani, leaked client data showing the bank's illegal practices.

Falciani, a French citizen, was sentenced by a Swiss court in absentia to five years in prison for industrial espionage.

The Paris Public Prosecutor opened an investigation into HSBC in April 2013 but withdrew in favor of the National Financial Prosecutor.

In May 2013, the "French State registered as a victim [of HSBC] in the investigation, as regards the allegations of aggravated money-laundering of tax evasion proceeds," according to an English translation (pdf) of the DPA.

The DPA said in 2011 HSBC "initiated a complete overhaul of its structure, controls and procedures aimed at adapting its risk profile."

The new French law called Sapin II -- formally titled the "Law Regarding Transparency, the Fight Against Corruption and the Modernization of Economic Life" -- became effective in December 2016.

It allowed for the first time the option of deferred prosecution agreements, known in France as Convention Judiciaire d’Intérêt Public.

A representative of HSBC said in an email that the FCPA Blog "wrongly presented the agreement reached between HSBC's Swiss Private Bank and French authorities as a Deferred Prosecution Agreement."

"However, it is not a DPA, as there is no review period and no remedial action agreed. Rather, it is a kind of Non Prosecution Agreement, as the settlement draws a line under this case," the email said.


Richard L. Cassin is the publisher and editor of the FCPA Blog.

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