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HSBC leak aids tax evasion probes

New revelations this weekend about patently illegal activities by the British bank HSBC may finally be a tipping point for reining in rogue banks. A major investigative report by a group of international media on the private banking unit of HSBC in Switzerland cataloged how bank staff actively counseled citizens of the U.S. and several other countries on how to evade taxes.HSBC-good3-620x310

The report is based on a massive leak of data from the bank first made available to French authorities in 2007 and shared in 2010 with law enforcement officials in the U.S. and other countries, but which is only now being fully disclosed to the public. The report – detailed over the weekend in the Guardian, on the International Consortium of Investigative Journalists website and on CBS’ 60 Minutes, among others – is the latest indictment of a bank that paid a $1.9 billion settlement to U.S. authorities for money laundering of funds from Iran, Mexico and other countries.

The newest information brought an immediate political reaction as Sen. Sherrod Brown of Ohio, the top Democrat on the Senate Banking Committee, said according to the Guardian that he would be asking the Department of Justice and the IRS what use they had made of evidence first given to them five years ago, which included accounts of 2,900 U.S. taxpayers. California Rep. Maxine Waters, the top Democrat on the House Financial Services Committee, also weighed in.

“Banks that actively help clients evade taxes, break American law or provide services to those connected with illegal activity should be punished accordingly,” she said in a statement. “While HSBC has paid billions in fines to the United States and other nations, it outrages me that not a single individual has been prosecuted or held accountable.” The 2012 settlement with HSBC provoked bipartisan indignation. At the time, Sen. Chuck Grassley, R-Iowa, wrote a blistering letter to Attorney General Eric Holder accusing the Department of Justice of giving the bank and its executives a “get-out-of-jail-free card.”

Bank critic Sen. Elizabeth Warren of Massachusetts took after HSBC in a 2013 hearing, asking rhetorically: “How many billions of dollars do you have to launder for drug lords and how many sanctions do you have to violate before someone will consider shutting down a financial institution like this?”