British‑based bank HSBC is scheduled to appear before a Paris court this week to finalize a multimillion‑euro fine for its alleged role in dividend‑tax fraud. A judicial source confirmed to AFP that a hearing to validate the settlement concerning HSBC will take place shortly.
The case forms part of a wider investigation into a massive fraud scheme uncovered by a consortium of European news outlets in 2018. Known as “CumCum,” the scheme involves investors selling shares to another party just before the dividend payment date to avoid taxes, then immediately repurchasing the shares, with both sides sharing the illicit proceeds. This practice mirrors the “Cum‑ex” dividend‑tax fraud that was exposed alongside it; the Cum‑ex frauds alone are suspected of involving up to €140 billion over two decades.
Following the allegations, several banks were raided, and some have already agreed to fines to avoid further prosecution. In September, Credit Agricole’s Cacib became the first to accept a deal with French prosecutors, agreeing to pay €88 million. The financial prosecutor’s office launched inquiries in December 2021 into six large banks, including HSBC, BNP Paribas and Société Générale. Bloomberg reported in December that HSBC’s fine could be €300 million, although the Paris prosecutor’s office has not confirmed that figure. HSBC declined to comment, but its third‑quarter earnings note referenced a €300 million provision for an inquiry “relating to dividend withholdings of certain legacy trading activities.”
The investigation into the CumCum scheme remains ongoing, with banks suspected of acting as intermediaries and even charging commissions to participating investors. In December 2022, a German court sentenced lawyer Hanno Berger—believed to be the scheme’s original mastermind—to eight years in prison. The outcome of HSBC’s case will be closely watched, as it could have significant implications for the banking industry and efforts to combat tax evasion.
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