Suspicions of tax evasion: massive searches in five banks in France

Europe 1 with AFP 14:50 pm, March 28, 2023

"The biggest operation in the history of the PNF": the financial prosecutor's office on Tuesday conducted massive searches targeting five major banks in France, suspected of having used a tax scheme on dividends called "CumCum", which could have cost more than a billion euros to the tax authorities. According to a source close to the case, it is therefore an operation of an unprecedented scale that were carried out Tuesday morning, in Paris and La Défense in the Hauts-de-Seine, 16 magistrates (out of 19 in office) of the PNF, 150 investigators (out of more than 250 in office) of the judicial investigation service of finances (SEJF), as well as six German prosecutors of the Cologne prosecutor's office.

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The five banking and financial institutions targeted

In a statement, the PNF confirmed Tuesday morning this information from Le Monde according to which it is five banking and financial institutions located in Paris and La Défense that are targeted by these operations. These are BNP Paribas, Exane (fund manager, subsidiary of BNP), Société Générale, Natixis and HSBC, according to the source close to the file. The first two are under investigation by the PNF for suspicion of aggravated tax fraud and laundering of aggravated tax fraud, after reports from the tax administration.

The other three are under investigation for aggravated laundering of aggravated tax evasion. All these investigations were opened in mid-December 2021, according to the PNF. A spokesman for Société Générale confirmed to AFP that a search had been underway at the group's headquarters since Tuesday morning, without knowing what the purpose was. The other banks did not immediately respond to AFP.

Recovery to €1 billion

According to the source close to the case, BNP and Exane were respectively targeted by a mandatory denunciation and a complaint from the tax administration (Directorate General of Public Finance, DGFip), allowing prosecution for tax fraud. The other three banks have not been the subject of such a denunciation, but are among the institutions targeted at the end of 2018 by a complaint filed by a collective "Citizens in organized gang" around the boss of PS deputies Boris Vallaud. In a tweet, he "welcomed" Tuesday the investigation of the PNF after a complaint that "finally bears fruit".

4 major French banks and 1 foreign bank searched.

160 investigators.

16 magistrates.

6 magistrates of the Cologne public prosecutor's office.

Our complaint to the PNF with 250 Landes men and women from #CollectifCitoyensEnBandeOrganisée is finally bearing fruit. https://t.co/z2XlTdydePhttps://t.co/TolnS3C59M

— Boris VALLAUD (@BorisVallaud) March 28, 2023

A group of sixteen media had revealed in 2018 via the "CumEx Files" these suspicions of giant tax fraud, which were the subject of investigations by the tax administration France in 2017. The amount of the damage, initially estimated by the consortium at 55 billion euros for a dozen countries, had been largely revised upwards in 2021 by these media, rising to 140 billion euros over twenty years.

But the source close to the file tempered the assessment of the damage concerning the French tax authorities, explaining that the total amount of tax adjustments for these five banks exceeded "only" one billion euros. Asked by AFP, the DGFip did not comment. Neither customs nor Bercy responded immediately.

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The practice of "CumCum"

The practice known as "CumCum", in financial jargon, consists in evading the taxation on dividends that foreign holders of shares in French listed companies must in principle pay. To take advantage of the scheme, these share owners, small savers or large investment funds, entrust their securities to a bank at the time of tax collection, thus escaping taxation. The banks would have acted as intermediaries, while charging a commission to the shareholders of shares.

Mentioned by the press among the banks that could have used this scheme, Crédit Agricole via its subsidiary Cacib was not one of the institutions targeted by the searches Tuesday morning, according to the close source. During the previous revelations in 2021, the Crédit Agricole group had indicated to AFP that it "did not offer arrangements to its clients for the purpose of dividend arbitrage or carry out dividend arbitrage operations for its own account", but that it carried out hedging operations "in compliance with the legal, tax and regulatory rules in force".