hsbc app android us,US probing HSBC clients with Asian accounts

The US Justice Department is conducting a criminal investigation of HSBC Holdings Plc clients who may have failed to disclose accounts in India or Singapore to the US Internal Revenue Service (IRS), according to three people familiar with the matter.

The Justice Department has sent out letters to about a dozen HSBC clients having accounts in India or Singapore in late June asking them to explain reasons for not disclosing to either the IRS or the Treasury Department.

"This is a global initiative by the IRS and the Department of Justice," said Robert McKenzie, an attorney at Arnstein & Lehr in Chicago who said he spoke to two people who got letters.

The probes show how the US is expanding its crackdown on offshore tax evasion beyond Switzerland and UBS AG, the largest Swiss bank, said Barbara Kaplan, a tax lawyer at Greenberg Traurig LLP in New York. London-based HSBC is Europe's biggest lender by market value.

"It's clear that the IRS and the Department of Justice are intending to pursue other depositors outside of Switzerland," Kaplan said. "They've announced it before, and they are moving forward in that regard."

UBS avoided prosecution last year by admitting it aided tax evasion from 2000 to 2007, paying $780 million, and agreeing to disclose secret account data on more than 250 clients. It later agreed to disclose data on another 4,450 clients. Seventeen UBS clients, two bankers and three alleged enablers of tax crimes have been prosecuted since the bank signed the deferred prosecution agreement. Another 15,000 US residents sought to avoid prosecution last year by disclosing offshore accounts.

The letters could mean that prosecutors got data on HSBC account holders from the bank, McKenzie said.

"My speculation is that there has to be some level of cooperation within HSBC, or someone within HSBC providing these names to the government," McKenzie said. "I would bet, under pressure, HSBC cooperated."

HSBC spokeswoman Diane Bergan declined to comment.

IRS Commissioner Douglas Shulman said last October his agency was scouring those disclosures "to identify financial institutions, advisers and others" that helped taxpayers cheat on taxes. He said the IRS is hiring 800 people in the next year and increasing staff in eight overseas offices, including Hong Kong. It also will open offices in Beijing, Sydney and Panama City.

The letters don't mention HSBC by name, yet are all directed to people with accounts at the bank, according to lawyers who saw them.

Bloomberg News

(HK Edition 07/07/2010 page3)