The move lends weight to warnings that the upcoming Foreign Account Tax Compliance Act (FATCA) could encourage financial institutions to turn away US customers.
According to the Wall Street Journal, hundreds of accounts will be affected. The bank sent letters to US clients with HSBC India this month, the WSJ reported, giving them 30 days to close their accounts.
An HSBC spokesperson confirmed the bank’s decision, but suggested the volume of assets affected would be lower than the $100m estimated by the WSJ.
“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,” said a statement from HSBC.
“HSBC in the United States provides a full range of wealth management and banking services to its Private Bank clients through a network of private bank offices and retail branches throughout the US. A dedicated team of advisers will help affected clients through the transition process.”
FATCA, which takes effect in January 2013, is designed to crack down on the use of offshore accounts by American citizens to evade taxes. American Citizens Abroad, a non-profit organisation, says it supports the aims of FATCA but last week urged US citizens to lobby Congress to repeal the act.
“FATCA has turned Americans into pariahs in the international financial world,” it warned. “Foreign financial institutions are already turning away American clients due to the costly IRS reporting requirements and the perceived significant legal and financial risks.
