Butterfield Bank has set aside $4.8 million to pay potential fines as a result of a US investigation into tax evasion.

And the bank’s financial report for last year said that any fines levied on the bank could be even higher.

The report said: “Management believes that, at this stage, a provision of $4.8 million, which has been recorded as of 31 December 2015, is appropriate based on the methodology used in similar settlements for other financial institutions.”

But it added: “As the investigation remains ongoing at this time, the timing and terms of the final resolution, including any fines or penalties, remain uncertain and the financial impact to the bank could exceed the amount of the provision.

“In this regard, we note that the US authorities have not approved or commented on the adequacy or reasonableness of the estimate.

“The provision is included on the consolidated balance sheets under other liabilities and on the consolidated statements of operations under other expenses.”

The Royal Gazette reported in 2013 that a US District Judge in New York’s southern district had authorised the US Internal Revenue Service to issues summons to several American banks to disclose records that identify US taxpayers with accounts at Butterfield, Swiss bank ZKB and their affiliates.

The move came after US taxpayers admitted to 371 previously undisclosed accounts at ZKB and 81 accounts at Butterfield — a breach of US tax laws.

The Bank of Butterfield at the time pledged to “co-operate fully with authorities and our correspondent banks in regard to this matter ...”

The 2015 financial statement said: “There are actions and legal proceedings pending against the bank and its subsidiaries which arose in the normal course of its business.

“Management, after reviewing all actions and proceedings pending against or involving the bank and its subsidiaries, considers that the resolution of these matters would in the aggregate not be material to the consolidated financial position of the Bank, except as noted in the following paragraphs.

“As publicly announced, in November 2013, the US Attorney’s Office for the Southern District of New York applied for and secured the issuance of so-called John Doe summonses to six US financial institutions with which the bank had correspondent bank relationships.

“The bank has been fully co-operating with the US authorities in their ongoing investigation.

“Specifically, the bank has conducted an extensive review and account remediation exercise to determine the US tax compliance status of US person account holders.

“The review process and results have been shared with the US authorities.”

A spokesman for the bank last night declined to comment further and referred The Royal Gazette to the financial report for 2015.