HSBC is closing all 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.
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.
"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 or 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.
However, BBC News understands that no criminal prosecutions are likely to take place.
'Up to standard'
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.
BBC News spoke to a pastry chef working in Jersey but living
in France who said she had been "forced" to close her account as she
didn't have an address in Jersey.
Stringent rules
A man describing himself as a student in Jersey said he had
been sent three letters in a month saying he must attend his branch or
his account would be closed down.
An individual originally from Jersey, but living in the UK,
has been told his account with HSBC Jersey is being closed down "to
comply with HSBC Group standards".
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.
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