Argentina’s central bank revoked the licenses of two top executives at HSBC Holdings Plc’s local unit, including the chief executive officer, arguing they had failed to prevent clients from laundering funds and evading taxes.
Gabriel Martino, the bank’s CEO, and Miguel Angel Estevez, a director, didn’t adequately manage risks at the institution or implement proper internal and external controls, the central bank said. HSBC must inform authorities of its plans to replace them within 24 hours.
Martino “didn’t direct the necessary actions to mitigate and address adequately the risk of prevention of money laundering and financing of terrorism,” the central bank said in the statement.
HSBC allegedly helped clients hide assets abroad to avoid paying taxes through shell companies and using legal advisers and lawyers, according to a government presentation released to the media in November. Argentines held as many as 4,000 accounts at HSBC’s Geneva branch, with only about 125 having declared funds, the presentation showed. HSBC has denied wrongdoing.
“HSBC Argentina continues to operate normally in the country,” spokeswoman Lyssette Bravo said in an e-mailed statement. The company “complies with the laws and regulations that govern its activity in the country and will continue cooperating” with the justice system and regulators.
‘Repatriate’ Funds
The bank created a platform to allow clients to evade taxes by funneling funds to Swiss accounts worth as much as $3.5 billion, tax chief Ricardo Echegaray said at a press conference today in Buenos Aires. Echegaray said he sent a letter to the central bank on July 17 asking for the board to review the status of the executives.
“The central bank measure is very positive, we see it as a very healthy decision,” Echegaray said. “Perhaps the decision will prompt the bank to come to the tax agency to resolve this problem. They have to repatriate $3.5 billion.”
The U.K. bank in June agreed to pay 40 million Swiss francs ($42 million) to close an investigation by Geneva prosecutors into allegations of money laundering at its Swiss private banking unit.
The central bank in April removed Citibank Argentina’s CEO from his post after the bank “ignored” local laws governing repayments on sovereign debt in a dispute with so-called holdouts led by billionaire Paul Singer.