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"Agricultural Credit firm forced to shell out nearly 88 million euros in penalties due to tax scheme known as 'Cumcum'"

Financial accord focuses on serious money laundering tied to severe tax fraud. The National Financial Prosecutor's Office has initiated probes into six additional banks under suspicion for applying this questionable practice.

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Revised Agricultural Credit's Financial Penalty: A whopping EUR 88 million fine due for the adopted...
Revised Agricultural Credit's Financial Penalty: A whopping EUR 88 million fine due for the adopted tax method, labeled as 'Cumcum'

"Agricultural Credit firm forced to shell out nearly 88 million euros in penalties due to tax scheme known as 'Cumcum'"

On the 8th of September, 2021, Crédit Agricole Corporate and Investment Bank (Cacib) agreed to pay a fine of approximately €88 million to settle the "CumCum" tax fraud case. The agreement, known as a Public Interest Judicial Agreement (CJIP), was signed on the 5th of September between Cacib and the National Financial Prosecutor's Office (PNF).

The "CumCum" tax fraud case involves a practice officially referred to as "dividend arbitrage." Banks act as intermediaries, charging a commission from shareholders in this scheme, hence the Latin term "CumCum" (win-win). In this scheme, shareholders hand over their shares to a bank at the time of tax collection to avoid taxation.

The practice was exposed in 2018 by an international media consortium, including Le Monde. The tax fraud involved international schemes, with foreign fraudsters. The offenses were habitual, with thousands of transactions each year.

Cacib conducted an internal investigation, stopped these practices, and implemented weekly controls. However, the bank admitted that it might have lost a client in the process of stopping the practices.

The PNF has launched investigations targeting six major banks suspected of using this practice to evade tax. Besides Cacib, the other five banks under investigation are BNP Paribas, Exane (asset manager, a subsidiary of BNP Paribas), Société Générale, Natixis, and HSBC.

The agreement between Cacib and the PNF concerns aggravated money laundering of aggravated tax fraud. The financial prosecutor, Jean-François Bohnert, praised the quality of Cacib's cooperation during the investigation and negotiations.

The investigations against the remaining banks are ongoing, with authorities examining potential abuses of tax regulations related to dividend payments. The agreement between Cacib and the PNF was to be validated by the tribunal president on the 8th of September, 2021.

This scheme allowed foreign shareholders of French listed companies to avoid the French dividend tax they are typically required to pay. The case was heard at the Paris tribunal on the 8th of September, 2021.

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