A number of major international banks have denied allegations they are helping clients to avoid tax using offshore companies after they were named in the 'Panama Papers' leak.
The 11 million documents leaked from Panamanian law firm Mossack Fonseca reference HSBC, Credit Suisse and Coutts Trustees, which is owned by RBS. The documents claim lenders helped to set up structures used for tax avoidance. It also suggests that some have helped companies subject to international sanctions.
More trouble for HSBC
The Panama Papers link the Swiss arm of HSBC, which was last year found to have helped hundreds of its UK clients to avoid tax, to the cousin of Syria President Bashar al-Assad.
Rami Makhlouf has an estimated wealth of $5 billion. In 2008, he was the subject of sanctions by the US Treasury, which believed he was someone who "manipulated the Syrian judicial system and used Syrian intelligence officials to intimidate his business rivals".
The papers show that Mossack Fonseca operated six businesses on behalf Mr Makhouf, even after sanctions were imposed. One of those companies was Drex Technologies, which HSBC's Swiss arm provided financial services for, according to the papers. In fact, in 2010, HSBC told Mossack Fonseca that it believed Drex Technologies was of "good standing".
The papers include an internal email in Mossack Fonseca's compliance department, which appears to confirm that HSBC, not only in Switzerland but the headquarters in London, was aware of who Mr Makhlouf was.
The email, sent on 17 February 2011, reads: "We have contacted HSBC who stated that they are very aware of the fact that Mr Makhlouf is the cousin of the President of Syria.
"The HSBC compliance department of the bank not only in Geneva but also in their headquarters in London know about Mr Makhlouf and confirm that they are comfortable with him."
Responding to the allegations, HSBC said: "We work closely with the authorities to fight financial crime and implement sanctions.
"Our policy is clear that offshore accounts can only remain open either where clients have been thoroughly vetted (including due diligence, 'Know Your Customer', source of wealth, and tax transparency checks), where authorities ask us to maintain an account for the purposes of monitoring activity, or where an account has been frozen based on sanctions obligations."
Credit Suisse and Coutts Trustees were among the more than 500 banks included in the Mossack Fonseca leaks, which are believed to have set up more than 15,500 companies with the Panamanian law firms.
A spokesperson for Coutts Trustees said: "We require all clients to be tax compliant as a condition of receiving our products and services and take a risk-based approach to identify and prevent tax evasion that relies upon extensive anti-money laundering systems and controls, including the requirement to understand the source of clients' wealth.
"The provision of trust and administration services is an entirely legitimate and key aspect of wealth management and succession planning."
Credit Suisse chief executive Tidjane Thiam said: "We do not condone structures for tax avoidance. Whenever there is a structure with a third party beneficiary we insist to know the identity of that beneficiary.
"We as a company, as a bank only encourage the use of structures when there is a legitimate economic purpose."
