HSBC to discontinue services for US clients with offshore a/cs

HSBC to discontinue services for US clients with offshore a/cs

In a letter sent earlier this month to US customers who have accounts with HSBC India, the bank said it is terminating "private banking services to US persons and certain trusts and non-operating companies connected to US persons," the Wall Street Journal reported.

Customers have about a month to close their accounts, according to the letter.
An HSBC spokeswoman said a team of advisers "will help affected clients through the transition process".

The report quoted a spokeswoman as saying that HSBC will "no longer offer wealth management services to US resident private clients from locations outside the US," and that American clients "will be better served by our private banking teams in the United States".

Those affected are hundreds of clients with accounts totalling as much as USD 100 million.

"HSBC is ending the practice of serving wealthy American residents from locations outside the US as a way of cooperating with the US and avoiding the fate of rivals that were fined or threatened with prosecution for assisting tax scofflaws," the report quoted people familiar with the matter as saying.

Federal authorities have also asked HSBC India to send letters to customers encouraging them to come forward to the IRS, the WSJ report said, adding that HSBC has complied with that request via a separate set of letters.

The IRS is offering reduced, yet stiff penalties for US taxpayers with secret offshore accounts who voluntarily report them.This programme is to end August 31.

The government said it believed "many" of these clients "have hidden their accounts from the IRS".

The move comes as the bank faces pressure from US authorities to provide information about account holders who may be evading taxes by using offshore accounts, particularly in India.

Earlier this year, US prosecutors had alleged that HSBC India helped US residents evade federal taxes.

Earlier this year, prosecutors had indicted an Indian-origin New Jersey businessman Vaibhav Dahake on charges that he conspired to evade US taxes by hiding offshore accounts in India maintained by HSBC.

Another Indian-American neurosurgeon was indicted in June by a federal grand jury for allegedly filing false tax returns and hiding more than USD 8.7 million in offshore accounts.

The Justice Department had in April asked a San Francisco federal court to let the IRS serve a "John Doe" summons on the Indian unit of HSBC seeking information about possible tax fraud "by people whose identities are unknown".

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