Author: Azizur Rahman 3 April 2023
Aziz Rahman of financial crime specialists Rahman Ravelli assesses the significance of the action taken by the authorities.
French authorities raided the Paris offices of five major financial institutions in an ongoing fraud and money laundering investigation.
HSBC, BNP Paribas, Société Générale, investment bank Natixis and BNP Paribas-owned brokerage Exane were targeted by France’s Parquet National Financier (PNF) fraud office. The raids were part of a preliminary investigation into so-called Cum-Cum schemes. The investigation was opened in December 2021 following complaints from France’s tax authorities.
The Cum-Cum scandal relates to allegations of tax evasion regarding money owed on dividends. It involves banks in France taking over shares in French-listed companies from a foreign owner just before a dividend is paid, so the foreign owner can avoid paying tax on the dividends. It is separate to the German Cum-Ex scandal, which involved trading shares in a way that disguised the identity of their owner so that more than one party could claim tax rebates.
These raids represent a significant stride forward by the French authorities. This differs from Cum-Ex, yet it may develop into a similarly large, complex investigation encompassing many individuals and organisations in numerous countries. Given the stature of those that have been raided it will be interesting to see which other major international names become embroiled in this; including possibly institutions in the City of London or the US.
It would be premature to say that this is set to be the next major international banking scandal, like Libor proved to be. But the fact that the investigation has been prompted by complaints from the tax authorities – and is already being classed as a fraud and money laundering investigation – suggests that investigators believe they have plenty of credible information to support their actions.
To learn more about the original Cum-ex trading scheme, please read or listen to our guide here.
Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.