Tax fraud allegations lead to five banks being searched in Paris

French prosecutors have confirmed that the offices of five banks have been raided in Paris. 

According to media reports in the country, HSBC, BNP Paribas, Exane, Societe Generale, and Natixis, were the banks at the heart of the investigation over fraud allegations. 

Prosecutors also revealed that dividend payments and money laundering were central to the investigation which commenced by the PNF in December 2021. 

The allegations around ‘cum cum’ fraud, which enables avoidance of tax through dividend payments.

A PNF statement issued, said: “The ongoing operations, which have required several months of preparation, are being carried out by 16 investigating judges and over 150 investigation agents.”

The news serves to enhance nervousness in global financial markets, with a backdrop of tension created by the downfall of Silicon Valley Bank and turbulence for Credit Suisse. 

Just last week at the China Development Forum in Beijing, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), offered a stark warning over the threat to financial stability in the banking sector. 

Georgieva drew attention to a plethora of factors key to hindering any growth in the banking space, with the war in Ukraine and the backlash from COVID-19 compounded by the fall of Silicon Valley Bank.

Georgieva underlined concerns that volatility within the banking sector will lead to a tightening of credit standards and may well limit growth for the global economy. She went on to describe uncertainties surrounding the world economy as being ‘exceptionally high’. 

She expressed her fears that the ‘rapid transition’ from low-interest rates to significantly higher rates will inevitably lead to stress and vulnerability within the banking sector. 

It is reported that the fraud in which the five key banks are being investigated for saw them form avenues for lucrative clients to bypass tax payments through the receiving of dividends.