The Financial Conduct Authority (FCA) was not formally told about the HSBC scandal, its chief executive said today.
Martin Wheatley said the City watchdog was not notified prior to media reports that HSBC's private Swiss bank may have helped clients to avoid paying millions of pounds in tax.
Speaking to the Commons Treasury Select Committee, Wheatley said: "I am not aware of a direct channel of information on this particular case." He added that he did not know whether HM Revenue and Customs (HMRC) had any obligation to provide information.
HSBC, the UK's biggest bank, has admitted past failings by its Swiss subsidiary in response to the allegations.
BBC Panorama said it had seen thousands of documents from the company's Swiss subsidiary which showed that some clients were able to conceal money from HMRC.
As a result of investigations by HMRC, some £135m in unpaid tax, interest and penalties have since been handed over by the British citizens involved, it is claimed.
HMRC was reportedly handed the information in 2010 but, although 1,1000 people in the UK were found to have not paid enough tax, only one has been prosecuted for tax evasion.
The bank now reportedly faces criminal investigations in the US, France, Belgium and Argentina, but not in the UK.
HSBC denied that all the Swiss account holders had evaded tax and said it was "co-operating with relevant authorities".
A spokesperson for the bank added: "We have taken significant steps over the past several years to implement reforms and exit clients who did not meet strict new HSBC standards."
The FCA had already been working with HSBC to improve its anti money-laundering procedures, Wheatley said.
HSBC agreed to pay 1.9 billion dollars (£1.2 billion) in the US in 2012 to settle an investigation into alleged breaches of money laundering rules which it was claimed had allowed the bank to be used by drug cartels and rogue states to launder cash.
Mr Wheatley said: "We are very closely monitoring the ability of the bank overall to improve the situation and we think improvements have been made."
And he also conceded that banks have been involved in a "staggering" number of scandals as he was confronted over the list of misconduct issues affecting the sector in recent years, which have also included Libor and foreign exchange rate rigging, money laundering and payment protection insurance mis-selling.
He told MPs: "I think it's quite clear that the number of scandals that we've seen in financial services, particularly in banks, has been staggering, and the latest allegations I think are equally scandalous."
Additional reporting by agenciesReuse content