HSBC's private bank unit to drop American clients
Source: Agencies |
July 21, 2011, Thursday
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Print Edition
Print Edition
THE private banking arm of HSBC will stop offering services to US residents outside the United States as a crackdown on offshore tax evasion makes the regulatory burden of banking around the world increasingly onerous.
"After a review of services that can be provided to US clients from locations outside of the US, we believe that US clients will be better served by our private banking teams in the United States," the bank said in a statement yesterday.
A team of advisers will help affected clients through the transition, HSBC said.
A bank source said the decision was voluntary and not in response to action against it by US authorities.
Last week the US Internal Revenue Service said it would give foreign financial institutions another six months to start complying with a new law to prevent offshore tax evasion by Americans under a phased-in schedule of compliance.
Under the deal, institutions now have until June 30, 2013, to reach agreements with the IRS on cooperation. These agreements previously had been expected to be concluded by the end of 2012.
Planned new rules will oblige non-US financial institutions to disclose details of wealthy US clients or face a withholding tax on their US assets, effectively putting the burden of disclosure on the bank rather than the client.
Critics in the banking industry argue the rules are likely to prove complex and costly because of the difficulty of identifying who is a US person, a category that takes in citizens, residents and Green Card holders among others.
A number of banks have recently found themselves under the scrutiny of US authorities looking to track down assets hidden from the tax man offshore.
Swiss bank Credit Suisse revealed earlier this month it was the target of a US Department of Justice probe, part of its broader investigation into banks suspected of helping Americans evade taxes.
The DoJ also announced it was looking into whether HSBC in India may have been used by some Americans to keep undeclared assets.
Credit Suisse's main Swiss rival UBS paid a US$780 million fine in 2009 and agreed to hand over information about nearly 5,000 secret accounts held by US citizens to settle US charges it aided tax evasion.
"After a review of services that can be provided to US clients from locations outside of the US, we believe that US clients will be better served by our private banking teams in the United States," the bank said in a statement yesterday.
A team of advisers will help affected clients through the transition, HSBC said.
A bank source said the decision was voluntary and not in response to action against it by US authorities.
Last week the US Internal Revenue Service said it would give foreign financial institutions another six months to start complying with a new law to prevent offshore tax evasion by Americans under a phased-in schedule of compliance.
Under the deal, institutions now have until June 30, 2013, to reach agreements with the IRS on cooperation. These agreements previously had been expected to be concluded by the end of 2012.
Planned new rules will oblige non-US financial institutions to disclose details of wealthy US clients or face a withholding tax on their US assets, effectively putting the burden of disclosure on the bank rather than the client.
Critics in the banking industry argue the rules are likely to prove complex and costly because of the difficulty of identifying who is a US person, a category that takes in citizens, residents and Green Card holders among others.
A number of banks have recently found themselves under the scrutiny of US authorities looking to track down assets hidden from the tax man offshore.
Swiss bank Credit Suisse revealed earlier this month it was the target of a US Department of Justice probe, part of its broader investigation into banks suspected of helping Americans evade taxes.
The DoJ also announced it was looking into whether HSBC in India may have been used by some Americans to keep undeclared assets.
Credit Suisse's main Swiss rival UBS paid a US$780 million fine in 2009 and agreed to hand over information about nearly 5,000 secret accounts held by US citizens to settle US charges it aided tax evasion.
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