Hervé Falciani: HSBC’s IT unable to provide sufficient audit oversight

HSBC’s IT systems were unable to give auditors sufficient oversight to identify tax avoidance in its Swiss private banking business

With HSBC’s banking practices coming under intense criticism, it has emerged that its IT systems were unable to give auditors sufficient oversight to identify tax avoidance in its Swiss private banking business.

Hervé Falciani, a former HSBC IT worker and whistlerblower, said the bank’s IT systems were unstable and had gone without updates for eight months.

In an interview on BBC Radio 4's Today programme, Falciani said: "The IT system is core to the bank. The IT systems had major issues. It was impossible [for HSBC] to have sufficient oversight."

He said the system suffered instabilities and it had been impossible to deploy system improvements for eight months.

When asked if the information he revealed also implicated the bank itself, Falciani replied: "Yes. The information contained everything needed for an internal audit. We are dealing with copies of many internal systems of the bank with names, relationships, contracts, transactions."

According to Falciani, HMRC knew about tax evasion among the private banking clients at HSBC’s Swiss arm since 2010.

He said the British government would have known about massive tax fraud among HSBC’s private bank clients at its Swiss division: "By that time [in 2010] I had already declared and explained the problems that were happening and it was already available to all justice departments that were asking for this information."

The IT systems had major issues. It was impossible to have sufficient oversight

Hervé Falciani, former HSBC IT worker and whistlerblower

In December 2014, the Office of the Attorney General of Switzerland (OAG) accused the former computer technical analyst at the HSBC Private Bank in Geneva of industrial espionage. In a statement, OAG accused Falciani of transmitting information from his employer's database to Lebanese banks, the Paris-based Direction Nationale d'Enquêtes Fiscales (the French government’s tax investigation department) and others. The data in question concerned internal bank processes as well as information about the bank accounts of HSBC clients.

OAG said Falciani had transferred this data to his own servers from October 2006 up to the moment he was detained in December 2008. 

OAG claimed: "It should be noted that this concerns a substantial amount of data which he procured from several separate systems without authorisation with a view to arranging it differently and setting up new data relationships. The accused compiled data and information on the bank's clients that was both personal and financial in nature, thus creating complete client profiles with the intent - as is the hypothesis of the OAG - at least in the initial phase in Lebanon, of cashing in on this data."

Earlier this month, HSBC appointed Darryl West at its new CIO. West previously worked at Barclays as CIO.

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