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French authorities investigate €100 billion fraud allegations at five top banks

French authorities have carried out a series of raids at leading banks in Paris as part of an extensive investigation into potential tax fraud and money laundering, potentially costing the French and German governments over €100 billion ($108 billion).

French and German prosecutors and investigators have executed searches in the Paris region, focusing on four French banks and one international bank, according to a spokesperson for France's Financial Prosecutor's Office (PNF), as reported by Deutsche Welle on March 28.

The banks involved in the investigation include Société Générale, BNP Paribas, Exane, Natixis, and HSBC. The PNF spokesperson also mentioned that the investigations are connected to the legally dubious 'cum/cum' practice, where banks establish complex legal structures to help wealthy clients evade dividend taxation.

At present, Société Générale, BNP Paribas, Exane (a subsidiary of BNP), Natixis, and HSBC are under suspicion for aggravated tax fraud laundering. BNP and Exane are also being investigated for aggravated tax fraud. The authorities stated that these investigations commenced in December 2021.

In a statement quoted by Deutsche Welle, the PNF highlighted:

"Today's operations, which took several months to prepare, involve 16 investigating judges and over 150 investigation agents."

The report also noted that "six prosecutors from the western German city of Cologne participated in the raids" related to practices exposed by the 2018 'CumEx files' – a reporting project led by the German investigative newsroom Correctiv, named after the Latin terms for 'with' and 'without,' referring to the disappearing dividends.

Banks facing challenges
In the meantime, banks worldwide continue to grapple with the fallout of several major banks collapsing or nearly collapsing, only to be saved by emergency mergers. José Manuel Campa, the current chairperson of the European Banking Authority (EBA), has cautioned that the banking sector remains highly vulnerable.

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