Five major banks raided for tax evasion

Already shaken on the markets for several days after the fall of Credit Suisse, French banks did not need that. Five of them, and not the least, were targeted on Tuesday March 28 by searches conducted by magistrates from the National Financial Prosecutor’s Office (PNF), accompanied by six German prosecutors. No less than 150 forensic financial investigators, a new Bercy department dedicated to tax, financial and customs fraud, also took part in the operation, which has been in preparation for several months.

These searches targeted the headquarters of BNP Paribas, Exane (a fund manager, subsidiary of BNP), Société Générale, Natixis and HSBC. They are part of investigations opened in December 2021 for aggravated tax evasion (for BNP and its subsidiary) or for laundering of aggravated tax evasion (for the other three), “relating to the so-called CumCum fraud scheme”, specified the PNF.

This practice of CumCum allows foreign holders of shares in French listed companies to avoid paying taxes on dividends. To do this, they entrust their shares to French banks for a few days at the appropriate time, thanks to a “loan-borrowing”, a common operation on the financial markets.

Banks charge a commission for this service. According to the targeted banks, this scheme is not illegal. But a French bank has nevertheless recognized the facts and accepted a tax adjustment, revealed in 2021 a representative of the Ministry of the Economy before a Senate inquiry committee. He did not indicate the name of the bank, nor the amount of the penalties – it is most certainly not one of the five who received the visit of the investigators on March 28…

The practice of CumCum exists throughout the European Union and was brought to light in 2018 by a joint investigation by several major media, which estimated the damage for ten states at more than 140 billion euros over twenty years.

These revelations led to a multitude of investigations. Trials have already taken place in Germany, the United Kingdom and Denmark. In France, the five banks concerned risk fines that could reach one billion euros.

Source