HSBC Bermuda is scrutinising its account holders in a bid to crack down on tax evasion and money laundering, The Royal Gazette can reveal.

The bank responded to questions from this newspaper after it was revealed its arm in Jersey, a UK Crown Dependency off the coast of England, had started weeding out customers who do not live on the island.

A spokeswoman for HSBC Bermuda confirmed: “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.”

She added: “With financial crime becoming more sophisticated, keeping accurate, up-to-date information on customers such as complete proof of identity or address, helps us monitor transactions effectively for potential fraudulent activity.”

The BBC reported that HSBC Jersey was closing accounts on the island held by UK residents — part of a wider move by UK banks to check the identity and addresses of thousands of customers who have accounts in the Channel Islands.

HSBC Jersey customers were told in a letter: “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.”

But the bank said that customers in the UK with HSBC expatriate accounts, which are also registered in Jersey, would not be affected.

The move came amid mounting pressure by the UK government to crack down on people hiding cash from the UK taxman.

According to the BBC, many of HSBC’s Jersey customers had been told to attend local branches with their passport and proof of address or their accounts could be closed.

Jersey’s Chief Minister Ian Gorst told the BBC said that banks had to comply with the self-governing island’s legislation.

He added: “They strongly have to know who their customer is, where the funds have come from and what they are doing with the funds.

“If they are not able to satisfy themselves around those regulatory issues they have to take decisions to close those accounts.”

Banks have already been investigated over allegations that offshore or foreign accounts have been used to dodge tax.

And in 2012 the UK tax authority HM Revenue & Customs (HMRC) launched a probe into a data leak from HSBC Jersey, which led to allegations UK customers may have used the island’s bank system to launder money or evade taxes.

The UK’s Daily Telegraph reported at the time that more than 4,000 customers with accounts at HSBC Jersey included a drugs baron and bankers facing fraud allegations.

HMRC are examining 170 accounts at HSBC Jersey and expects to raise £10-20 million in unpaid taxes and penalties.

The Jersey financial regulator JFSC has carried out an investigation into the island’s HSBC operation and found “isolated examples of criminality”.

JFSC Director General John Harris said: “We were satisfied the controls the bank were operating were generally good and up to standard.”

HSBC Jersey said in a statement it had conducted a full review and cooperated with JFSC investigation and made changes to prevent tax evasion and money laundering.

The bank added: “We have exited clients who do not meet those standards or where we have concerns in relation to tax compliance.”