HSBC Holdings PLC is moving to mollify federal authorities investigating how the banking industry has helped U.S. clients evade taxes.JAT Note: The move appears only to affect the wealthier U.S. depositors ($5,000,000+). The Bloomberg report below says that because only the wealthier U.S. depositors are involved "only about a few hundred will be involved." That still leaves unaccounted for all the other U.S. depositors in HSBC who may not have qualified for or did not desire private banking services of the type subject to this notice. For example, U.S. depositors for HSBC India, which was subject to a John Doe summons, are receiving notices that presage a release to the IRS of their information and documents and suggesting that the U.S. depositors consider the OVDI 2011. However, one can project / speculate that if HSBC is willing to abandon its high net worth U.S. depositors, it will not behave better with its much more numerous lower net wroth U.S. depositors.
The global banking giant is cutting ties with wealthy American clients who bank offshore, as U.S. prosecutors turn up the heat on the bank to produce information about account holders who may be evading taxes, people familiar with the matter say.
A spokeswoman said the global banking giant will "no longer offer wealth-management services to U.S. resident private clients from locations outside the U.S.," and that American clients "will be better served by our private banking teams in the United States." At issue are hundreds of clients with accounts totaling as much as $100 million, said a person familiar with the situation. U.S. clients need roughly $5 million in assets to qualify for an HSBC private-client account, another person familiar with the situation said.
The extraordinary move comes as the U.S. Justice Department and Internal Revenue Service intensify crackdowns on offshore tax evasion and look beyond the world of Swiss banking for institutions that might be providing places to hide money.
HSBC is ending the practice of serving wealthy American residents from locations outside the U.S. as a way of cooperating with the U.S. and avoiding the fate of rivals that were fined or threatened with prosecution for assisting tax scofflaws, the people familiar with the matter say. The Justice Department declined to comment.
In a letter sent earlier this month to U.S. 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." Customers have 30 days to close their accounts, according to the letter.
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HSBC shuns private banking business from Americans outside U.S. (Reuters 7/20/11).
HSBC Tells U.S. Private Bank Clients Banking Must Be Onshore (Bloomberg 7/20/11).