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British lender HSBC will appear before a Paris court this week to finalise a multimillion-euro settlement over alleged dividend tax fraud, a judicial source told AFP on Tuesday.
The case forms part of wider investigations into a large-scale tax fraud that operated for years across several European countries and was uncovered by a consortium of European media organisations in 2018.
Following the revelations, authorities raided several banks, and some institutions have already agreed to pay fines to avoid further prosecution.
A legal source said the court would hold a hearing on Thursday at 10:00 am to approve the fiscal settlement involving HSBC, without providing further details.
In December, Bloomberg News reported that the fine could amount to 300 million euros ($350 million) to close the investigation, although the Paris financial prosecutor’s office has not confirmed the figure.
HSBC declined to comment when contacted by AFP, but referred to a note in its third-quarter earnings statement released in October, which disclosed a 300 million euro provision linked to an inquiry into dividend withholding practices tied to certain legacy trading activities.
French financial prosecutors launched investigations in December 2021 into six major banks, identified by a source close to the case as HSBC, Crédit Agricole’s Cacib unit, BNP Paribas and its Exane subsidiary, Société Générale, and Natixis.
In September, Cacib became the first bank to reach an agreement with French prosecutors, agreeing to pay 88 million euros.
The alleged fraud, known as “CumCum”, involves investors temporarily transferring shares just before dividend payment dates to avoid tax, then buying them back immediately, with the parties sharing the unlawful gains.
Investigators exposed the scheme alongside the related “Cum-ex” dividend tax fraud in 2018. Media reports estimate that Cum-ex frauds alone may have cost governments up to 140 billion euros ($151 billion) over two decades.
Authorities suspect banks acted as intermediaries in the transactions and charged commissions to participating investors. In December 2022, a German court sentenced lawyer Hanno Berger, regarded as the scheme’s original architect, to eight years in prison.
