Prosecutors raid French banks in multi-billion-euro tax fraud investigation

France  Benoit Tessier/Reuters
© Benoit Tessier/Reuters

French authorities have raided the Paris offices of five banks suspected of tax fraud as part of a widening European investigation of a scheme that allowed investors to avoid paying billions of euros in tax.

Some 150 investigators from the financial prosecution office conducted searches of Société Générale, BNP Paribas and its Exane unit, HSBC and the investment bank arm of the BPCE banking group, in central Paris and the La Défense financial district on the outskirts of the French capital.

The raids follow preliminary investigations opened in December 2021 into a dividend arbitrage trading scheme, in which investors quickly trade shares close to dividend payout days in order to obscure the question of ownership and allow several parties to illegally reclaim tax rebates.

Banks allegedly played a facilitation role in the schemes, while earning commissions on the illegal transactions.

The same investigation is looking into suspicions of money laundering.

European investigation

The multi-year, multi-billion-euro fraud was revealed by an investigation published in 2018 by a group of 16 European news outlets, who dubbed it the “CumEx-Files” - cum-ex in Latin means 'with-without', a reference to the apparently disappearing dividend payments.

The operations " required several months of preparation," the financial prosecutor's office said in a statement in which it indicated that French investigators were joined by six German investigators.

Similar investigations have been conducted in Germany and other European countries, with the fraud estimated to have cost a dozen countries 140 billion euros in lost tax revenue over twenty years.

A German court in December sentenced tax lawyer Hanno Berger to eight years in jail for a dividend-stripping scheme that some estimates said cost the German tax authorities around 10 billion euros.

Related trials have convicted British bankers on similar charges.

(With newswires)