French authorities on Tuesday conducted raids in and around Paris in what they say is a possible tax fraud case that may have cost governments more than €100 billion ($108 billion). The raids targeted four French banks and one international bank on suspicion of money laundering and fiscal fraud. Societe Generale, BNP Paribas, Exane, Natixis, and HSBC are the banks being investigated. The raids are linked to PNF investigations opened in December 2021.
PNF representatives said the investigations are linked to legally dubious "cum cum" practices in which banks create overly complex legal structures as a way to allow wealthy clients to skip out on tax liabilities for dividends. Though widely used in the banking industry for decades, cum cum practices became more widely known through the 2018 "CumEx Files," a reporting project led by the German investigative media outfit Correctiv.
Cum-ex is Latin for "with-without," describing the nature of miraculously disappearing dividends. In its research, Correctiv and associated media outlets found that banks, stock traders, and lawyers had successfully managed to split dividends in such a way as to avoid as much as $62.9 billion in taxes across Europe, with Germany (ca. $36.2 billion) and France (ca. $17 billion) being by far the biggest victims.
The scandal reached the highest levels of government in Germany, with Chancellor Olaf Scholz called to testify three times under oath over his relationship with the Warburg Bank and what he knew about its practices.
"The ongoing operations, which have required several months of preparation, are being carried out by 16 investigating judges and over 150 investigation agents," according to a PNF statement issued Tuesday. Some six prosecutors from the western German city of Cologne were also involved in the raids.