LONDON (AFP) - Britain's financial regulator admitted Tuesday that it had no knowledge of an investigation by tax authorities into allegations that banking giant HSBC helped wealthy customers dodge millions of dollars in taxes.
Martin Wheatley, chief executive of the Financial Conduct Authority (FCA), said it did not know about the claims regarding the London-based bank's Swiss division before they emerged in a cache of secret files published this weekend.
HM Revenue and Customs, Britain's tax authority, was passed information about 3,600 UK businesses and individuals in 2010 and recouped more than £135 million (S$).
But Wheatley told parliament's Treasury committee: "We didn't have the specific allegations as far as I'm aware from HMRC on this particular incident."
Committee members responded with incredulity, given that the FCA has been working closely with HSBC since 2013 to improve its implementation of anti-money laundering rules following a string of high-profile controversies at the bank.
HMRC chief executive Lin Homer later said that when it was passed files by the French authorities on HSBC's Swiss dealings in 2010, it was prohibited from sharing the information.
"HMRC received the HSBC data under very strict conditions, which limited our use of it to pursuing offshore tax evasion and prevented us from sharing the data with other law enforcement authorities," she said.
"Under these restrictions, we have not been able to seek prosecution for other potential offences, such as money laundering."
Homer said that French authorities on Monday had promised to "provide all assistance necessary to allow HMRC to exploit the data to its fullest".
She said tax officials had also contacted the investigative journalists behind the leaks for more information.
The latest allegations sparked a political row over why Britain did not act sooner.
HMRC said it had flagged to prosecutors three potential criminal cases in the files but that only one of these led to a prosecution.
A spokeswoman for Prime Minister David Cameron said Tuesday that ministers had also been kept in the dark about the HMRC investigation.
Herve Falciani, an IT worker turned whistleblower, stole the files in 2007 and passed them to French authorities, but they had not been previously made public.
Their publication, detailing claims that HSBC's Swiss division helped clients in more than 200 countries evade taxes on accounts containing US$119 billion (S$), has caused global shock waves.
Margaret Hodge, chairwoman of the British parliament's public accounts committee, said late Monday that it would be launching an urgent inquiry into the allegations.
HSBC has acknowledged there had been problems in its Swiss private banking subsidiary, but said that it had been overhauled and now has strong controls in place.