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March 19, 2015updated 11 Jan 2016 2:23pm

Jersey Finance chief rejects suggestion of scandal from HSBC account closings

By Spear's

Media reports this week have variously claimed that HSBC Private Bank is closing all its accounts in Jersey, investigating all Jersey account-holders and closing every account registered in Jersey but belonging to someone living on the UK mainland. None of these are quite true – and any stain on Jersey they suggest has been robustly rebutted by the island’s finance chief.

As part of a wider programme of ‘de-risking’ designed to bring its operations in line with international anti-fraud standards, HSBC and other UK banks have been doing some housekeeping in the offshore financial centre.

‘We have been reviewing the details we hold on our customers to ensure we have the information we need to protect them, together with wider society, against fraud and other financial crime,’ said a spokesperson for the bank. ‘Keeping accurate, up-to-date information on customers… helps us monitor transactions effectively for potential fraudulent activity.’

Geoff Cook, the CEO of Jersey Finance, says the island should not be tainted by this story. ‘At every turn Jersey has been able to answer its critics and defend its integrity absolutely and unequivocally, with its position as a cooperative, transparent and well-regulated IFC being regularly acknowledged by independent assessments from some of the world’s leading global bodies, including the OECD and IMF.

‘As far as transparency, tax avoidance and financial crime is concerned, Jersey has been very clear on its position, and has taken several steps to ensure we remain compliant with global standards. We have taken steps to bring an end to abusive tax structuring, which is also giving clients reassurance.’

The BBC’s initial report on the Jersey closings quoted a letter sent to customers which read: ‘We’ve taken the difficult decision to close all Jersey accounts for customers who don’t live there. This is to comply with HSBC Group standards.’ HSBC has since insisted that not all accounts are being closed.

However, an undisclosed number of Jersey account-holders have been told to attend a local branch (ie one on the island) or face the closure of their account, and some have certainly been closed as part of the ‘remediation exercise’. Barclays and RBS are among the other banks reviewing accounts based in Jersey.

Geoff Cook is sanguine rather than riled. ‘It’s difficult to see that Jersey will be adversely affected by this procedure. The latest figures collated by the Jersey Financial Services Commission actually show that bank deposits remain steady around the £132 billion mark, a figure that includes increasing amounts drawn from the Middle East and Far East where the Island has been successful in attracting new business.’

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In fact, Cook welcomed the increased regulatory pressure and drive for transparency which has emerged from the financial crisis, citing them as key drivers in a ‘flight to quality’ that gives Jersey the opportunity to shine.

Although HSBC is very unlikely to uncover problems on the scale of those currently assailing its Swiss private banking arm – clients of which included a dealer in conflict diamonds, several bankers accused of embezzling and mismanagement and major players in the BAE corrupt arms deals – it’s evidently worth irritating a few thousand clients in the cause of conspicuous rectitude.

In practice, these are likely to be relatively small-time domestic customers. The bank has confirmed that those holding accounts with HSBC Expat, which has been wholly based in Jersey since 2013, will be unaffected by the identity checks.

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