In Germany, tax authorities refunded at least €3.9b in illicit tax refunds between 2001 and 2011, according to the finance ministry.
The fraud has been dubbed cum-ex, which is derived from Latin meaning "with without", and refers to the disappearing nature of the dividend payments.
The raids in Frankfurt, which were first reported by Bloomberg, are being carried out to locate emails and written correspondence, the Cologne prosecutors added.
More than 50 investigators and IT experts from the local police and tax investigation offices are also involved in the operation.
Cologne public prosecutors are investigating 1,500 people as part of a broader inquiry into the long-running fraud involving international lenders ranging from Deutsche Bank, Barclays, and Macquarie to UniCredit's HypoVereinsbank.
Prosecutors have been investigating the scandal for years, but the inquiry was stepped up last month when a former senior banker from Fortis bank was arrested in Mallorca at the request of Frankfurt prosecutors. Fortis, which collapsed in the financial crisis and was acquired by Dutch peer ABN Amro, was allegedly one of the first lenders to exploit the design flaw in the German tax code. Frankfurt prosecutors raided ABN Amro's offices in Frankfurt in 2019 and 2020.
Written by: Stephen Morris and Joe Miller
© Financial Times