* Private bank ceases wealth management services to Americans abroad
* Says U.S. clients better served by teams in U.S.
* Team of advisers to help affected clients in transition
LONDON, July 20 (Reuters) - The private banking arm of HSBC will stop offering services to U.S. residents outside the United States as a crackdown on offshore tax evasion makes the regulatory burden of banking around the world increasingly onerous.
“After a review of services that can be provided to U.S. clients from locations outside of the U.S., we believe that U.S. clients will be better served by our private banking teams in the United States,” the bank said in a statement on Wednesday.
A team of advisers will help affected clients through the transition, HSBC said.
A source at the bank said the decision was voluntary and not in response to action against it by U.S. authorities.
Last week the U.S. Internal Revenue Service said it would give foreign financial institutions another six months to start complying with a new law to prevent offshore tax evasion by Americans under a phased-in schedule of compliance.
Under the deal, institutions now have until June 30, 2013, to reach agreements with the IRS on cooperation. These agreements previously had been expected to be concluded by the end of 2012.
Planned new rules will oblige non-U.S. financial institutions to disclose details of wealthy U.S. clients or face a withholding tax on their U.S. assets, effectively putting the burden of disclosure on the bank rather than the client.
Critics in the banking industry argue the rules are likely to prove complex and costly because of the difficulty of identifying who is a U.S. person, a category that takes in citizens, residents and Green Card holders among others.
A number of banks have recently found themselves under the scrutiny of U.S. authorities looking to track down assets hidden from the tax man offshore.
Swiss bank Credit Suisse revealed earlier this month it was the target of a U.S. Department of Justice probe, part of its broader investigation into banks suspected of helping Americans evade taxes.
The DoJ also announced recently it was looking into whether HSBC in India may have been used by some Americans to keep undeclared assets.
Credit Suisse’s main Swiss rival UBS paid a $780 million fine in 2009 and agreed to hand over information about nearly 5,000 secret accounts held by U.S. citizens to settle U.S. charges it aided tax evasion.
The UBS case prompted many private banks to tighten up their policies for dealing with American clients, in some cases making it hard for U.S. persons to find a bank overseas that will take their business.
Meanwhile, rising intolerance among western governments for offshore tax evasion has spread beyond the U.S. with authorities in Germany and Britain taking steps to claw back revenues from undeclared assets. (Reporting by Chris Vellacott; Editing by Sinead Cruise and Mike Nesbit)