The ex-permanent secretary for tax at HMRC and four other outside specialists will be members of the Financial System Vulnerabilities Committee along with at least two non-executive directors.
Hartnett will advise the committee on tax transparency, anti-avoidance and compliance. The other specialists comprise the former head of the UK’s Serious Organised Crime Agency; an ex-deputy national security adviser to President George W Bush; a former UK Foreign Office expert in security and counter-terrorism, who was also head of intelligence (law enforcement) for British Customs, focusing on international counter-narcotics, tax and excise fraud; and the ex-chief executive officer of SWIFT, the industry-owned global financial messaging system.
Though the new committee will be a committee of the board, the five will not become become directors of HSBC.
A measure of how seriously HSBC is taking the committee’s work is that the group chairman, chief executive, chief legal officer, head of financial crime compliance and group money laundering reporting officer, and head of regulatory compliance will also attend the committee.
The bank said the committee will advise the board about its continuing obligations to regulatory and law enforcement agencies in these areas and will provide the board with a “forward-looking perspective” on financial crime risk. It will meet between six and eight times a year and members will give between 35 and 40 days of their time to it annually. Committee meetings will also take place on an ad hoc basis, though they will not always be where all members attend.
HSBC is one of the companies that responded to Conservative MP Stephen McPartland's call for a commitment from the members of the FTSE 100 index to tax transparency and a new international accounting standard for country-by-country reporting.
"Tax transparency is something we at HSBC take very seriously, both in respect of our own tax position and in respect of our customers," wrote Iain Mackay, HSBC's group finance director, in November. "At a corporate level we are conscious of the need to pay our fair share of taxes. We are also embarking on an initiative to seek to ensure, as far as possible, that HSBC's banking services are not used to facilitate tax evasion. I very much support your initiative on tax transparency and would be happy to offer HSBC's assistance in developing an effective standard on the same."
The decision to set up the new committee comes as the tax, accounting and audit panel of the UK's Parliamentary Commission on Banking Standards is examining whether banks' conduct of their tax affairs contributed to the financial crisis of the last five years.
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