Why did French prosecutors raid Societe Generale and other bank headquarters?
French prosecutors have raided the offices of five banks in Paris including Societe Generale and BNP Paribas as part of an investigation into tax fraud.
Financial prosecutors have raided the offices of large banks in Paris, including BNP Paribas, Societe Generale, HSBC, Natixis, and BNP subsidiary Exane, in connection with an investigation into tax fraud.
Investigators sent more than 150 agents to search emails and documents at the banks, in the largest raid ever conducted by the French National Financial Prosecutor’s Office.
Authorities orchestrated the raids as part of preliminary investigations launched in December 2021 on suspicion of money laundering and tax evasion connected to dividend payments.
JUST IN: 🇫🇷 5 major banks raided by French authorities in €100 billion fraud investigation.
— Watcher.Guru (@WatcherGuru) March 28, 2023
• Societe Generale
• BNP Paribas
• Natixis
• HSBC
• Exane
Alleged tax evasion on dividend payments
The allegations involve so-called “cum-cum” trades, which are questionable transactions that aim to acquire tax advantages in connection with the payment of dividends. Authorities are looking into allegations that banks were helping foreign clients avoid paying taxes by temporarily holding their shares in French companies when dividends were due.
The raids aimed to gather evidence to determine whether banks deliberately attempted to help clients avoid taxes as dividends were traded.
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Good Morning Everyone! Could things get worse in France right now? This morning prosecutors raided 5 of the biggest banks including Société Generale, BNP Paribas and HSBC. They face +$1 billion in penalties from tax fraud and money laundering.
— Genevieve Roch-Decter, CFA (@GRDecter) March 28, 2023
Are you kidding me.
A string of similar financial scandals
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The financial prosecutors’ actions come in the wake of similar dividend scandals in Germany where governments were tricked into refunding dividend taxes that were not paid to begin with. These investigations in Germany, which led to raids of banks and homes of businesspeople have resulted in some bankers receiving jail sentences. The fraud reportedly cost billions of euros in taxpayers’ money.
The raids in Paris also come on the heels of the international financial upheaval caused earlier this month by the failure of two banks in the United States, and the takeover by UBS of embattled lender Credit Suisse of Switzerland.