Searches were underway on Tuesday at the premises of five major banks in France, as part of investigations opened by the National Financial Prosecutor’s Office (PNF) on suspicion of aggravated tax evasion and aggravated money laundering of aggravated tax evasion.
No less than 160 investigators attached to Bercy were dispatched simultaneously to BNP Paribas, Société Générale, Natixis, Exane (a subsidiary of BNP Paribas) and HSBC, in Paris and mainly in the business district of La Défense, according to information from the ” World” confirmed by the PNF.
Sign of the scale of the operation, 16 of the 19 magistrates of the Financial Prosecutor’s Office are on site, as well as German magistrates. The banks have not yet commented at this stage, with the exception of Societe Generale, which has admitted that searches were underway at La Défense.
Gain fiscal
The investigations focus on dividend fraud practices, known as “CumCum”. These arrangements allow non-resident investors in France to escape the tax on dividends on shares of listed French companies.
The process consists in transferring the ownership of the securities to a tricolor bank when the coupon is detached to recover them later, with the dividend. The banks, being domiciled in France, do not pay taxes on the dividend received. The tax gain can then be shared between the bank and the investor.
A recovery of more than 1 billion euros
This practice had been identified as early as 2017 by the French tax administration. The first tax adjustments were made in 2021 by the Directorate General of Public Finance (DGFiP), which launched seven procedures once morest financial institutions, as “Les Echos” had revealed. The file was then entrusted to the PNF, which launched a criminal investigation.
According to a source familiar with the matter, the recovery notified on the five banks raided exceeds 1 billion euros (including penalties). A sixth investigation into dividend fraud is also underway.
“The operations started on Tuesday are likely to last several days as the volumes of data to be recovered are large,” said the same source. “The copies to be made are counted in tetrabytes and relate to complex financial transactions”. Securities lending and derivative transactions will then be scrutinized to disentangle those that have real economic utility from those that served to avoid tax. “The analysis phase will be very long,” continues the same source.
An establishment had admitted the facts
A collective of taxpayers led by the socialist deputy Boris Vallaud had also filed a complaint once morest X at the end of 2018 for money laundering of tax evasion and aggravated fraud. The track studied by their lawyer consisted in identifying the beneficial owner of the operations.
The vast majority of the offending banks have always disputed any irregularity in the case, regularly recalling their contribution to tax in France. Only one establishment had acknowledged the facts and accepted a tax adjustment, indicated a representative of the tax administration before the Senate at the end of 2021. A transaction under a “comprehensive settlement” might have been concluded, which does not does not prevent the bank in question from also being prosecuted.
These financial arrangements have been denounced by a certain number of parliamentarians during the examination of the finance law in recent years. Senator Nathalie Goulet (Centrist Union) today accuses the government of showing “unbearable laxity” on this subject, while the various measures proposed to fight once morest this fraud – including the revision of tax treaties with certain States – were rejected.
These arrangements are also in the sights of a growing number of jurisdictions all over Europe. This is particularly the case in the Netherlands, where the ABN Amro bank has already made provisions in the event of a dispute, but also in Germany, where a large number of investigations are underway.
Across the Rhine, the prosecution is also maneuvering on similar assemblies called “Cum ex”. A vast tax evasion scandal, which would have cost 35 billion euros in lost revenue for the German tax authorities. As part of this case, searches were also carried out at the premises of BNP Paribas in Frankfurt.
