US tax evasion inquiry into HSBC clients grows.

U.S. prosecutors are ramping up their criminal investigation into HSBC concerning its sale of offshore tax services to wealthy Americans suspected of evading taxes, according to court papers and two people briefed on the matter.

At least two American clients of HSBC, which is based in London, are aiding U.S. prosecutors by turning over account details, names of bankers and internal memorandums and other confidential documents regarding HSBC’s offshore private bank, according to one person briefed on the matter. He spoke on the condition of anonymity because of the continuing investigation.

HSBC, however, has not received notification from prosecutors indicating that a grand jury has been convened to investigate it, according to another person briefed on the matter. That would be the first step toward an indictment.

Juanita Gutierrez, a spokeswoman for HSBC in New York, declined to comment on the investigation but said, ‘‘HSBC does not condone tax evasion.’’ The investigation of the bank, which is being conducted by the Justice Department, began informally around late 2008 as an offshoot of the scrutiny of UBS, the Swiss bank giant, over offshore services used to aid tax evasion.

One of the people briefed on the investigation said the Justice Department was ‘‘looking for UBS-style numbers and UBS-style fact patterns, to see if there’s a UBS-style situation of a bank actively marketing’’ tax evasion services in the United States.

A Justice Department spokeswoman declined to comment Friday.

Agents from the U.S. Internal Revenue Service have paid surprise visits in recent weeks to at least two American clients of HSBC suspected of tax evasion.

Holding an offshore account is not illegal, but Americans must declare the income to the tax agency.

On a related front, the Justice Department sent letters last month to several HSBC clients informing them that they faced possible criminal charges of evading taxes through the bank, in part through its India affiliates, according to a lawyer whose client received a letter.

HSBC has turned over to prosecutors evidence regarding the accounts of at least two prominent clients, including documents and, unusually, recordings of dozens of conversations between the clients and their bankers. Several former clients are cooperating, including those already indicted and some who have come forward voluntarily.

Prosecutors are also looking at suspicious activity reports filed by HSBC.

The reports, which financial institutions are required to file with the Financial Crimes Enforcement Network, a unit of the U.S. Treasury Department, concern suspicious or potentially suspicious activity by clients.

In April, the authorities arrested two wealthy HSBC clients, Mauricio Cohen Assor and his son, Leon Cohen-Levy, both property developers, and charged them with evading taxes through the bank’s offshore division. The case is set to go to trial in September.

In February, a wealthy Virginia doctor, Andrew B. Silva, pleaded guilty to evading taxes through the offshore division of HSBC, according to court papers in his case. Dr. Silva came to the attention of the authorities when he was randomly caught carrying cash into the Newark airport in New Jersey.

In part, the authorities want to know whether HSBC, which shut down its offshore private banking services during the investigation into UBS, illegally advised clients to funnel their money to other banks or take large cash withdrawals and sneak the money into the United States, said one of the people briefed on the investigation.

Source : MY Digital FC