Under the scrutiny of the US authorities for its tax-evading clients, financial services giant HSBC has said it will severe ties with hundreds of its wealthy American clients, including those of Indian-origin, who have accounts in offshore locations.
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 spokesperson said a team of advisers “will help affected clients through the transition process.” The report quoted a spokesperson 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 $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.”