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HSBC closing Jersey accounts belonging to customers living in UK

Friday, March 20th 2015 - 07:42 UTC
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Asked about the move, Jersey's Chief Minister Ian Gorst told BBC News that banks “have to comply with the legislation that we have in place”. Asked about the move, Jersey's Chief Minister Ian Gorst told BBC News that banks “have to comply with the legislation that we have in place”.
Jersey's financial regulator JFSC John Harris also carried out an investigation into HSBC which found that there were “isolated examples of criminality”. Jersey's financial regulator JFSC John Harris also carried out an investigation into HSBC which found that there were “isolated examples of criminality”.
HMRC said its inquiry is currently looking into 170 (out of 4.000) of the cases and expects to raise £10m-£20m in unpaid taxes and penalties. HMRC said its inquiry is currently looking into 170 (out of 4.000) of the cases and expects to raise £10m-£20m in unpaid taxes and penalties.

HSBC is closing accounts on Jersey belonging to customers living in the UK. It is part of a move by UK banks carrying out checks on the identity and addresses of thousands of their customers on the Channel Islands. The London-based bank said it had taken measures to prevent its services being misused.

 Customers of HSBC Bank plc have been sent a letter saying: “We've taken the difficult decision to close all Jersey accounts for customers who don't live there. This is to comply with HSBC Group standards.”

But the bank says customers in the UK with HSBC expat accounts, which are also registered in Jersey, are not affected. The so-called “remediation exercise” comes amid pressure on banks to ensure that off-shore accounts cannot be used to hide money from UK tax authorities.

Many of the bank's account holders in Jersey have been told to attend local branches with their passport and address details or their accounts may be closed.

Asked about the move, Jersey's Chief Minister Ian Gorst told BBC News that banks “have to comply with the legislation that we have in place”.

”They strongly have to know who their customer is, where the funds have come from, (and) what they are doing with the funds,“ he said.

”If they are not able to able to satisfy themselves around those regulatory issues then they have to take decisions to close those accounts.“

The move is understood to be part of a wider process known as ”de-risking“ whereby banks are attempting to comply with a series of global anti-fraud and transparency rules.

It also follows a series of high-profile cases in which banks have been investigated over allegations that off-shore or foreign accounts have been used to aggressively avoid or evade tax.

In 2012 the UK tax authority HMRC began an investigation into a data leak at HSBC in Jersey which led to allegations that British residents may have used accounts to launder money to evade taxes.

The Daily Telegraph reported at the time that more than 4,000 British residents with accounts at HSBC Jersey included a well-known drug dealer and bankers facing fraud allegations.

HMRC said its inquiry is currently looking into 170 of the cases and expects to raise £10m-£20m in unpaid taxes and penalties.

Jersey's financial regulator JFSC also carried out an investigation into HSBC which found that there were ”isolated examples of criminality“.

”We were satisfied the controls (the bank) were operating were generally good and up to standard,“ said JFSC's Director General John Harris.

HSBC said it conducted a full review and cooperated fully with the separate JFSC investigation and has implemented ”numerous standards“ to prevent services being used to evade taxes or launder money.

The bank added: ”We have exited clients who do not meet those standards or where we have concerns in relation to tax compliance.”

The letters sent out to customers of HSBC Jersey are thought to involve a number of different types of account holder.

Jersey's finance authorities point out that the island complies with international regulations and said its tax avoidance and anti-fraud rules are among some of the most stringent in the world.

An independent report in 2013 by the research firm Capital Economics suggested that financial activity in Jersey helped provide up to £2.5bn in UK tax revenues each year.

Categories: Economy, International.

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