Butterfield Bank has promised to cooperate with a probe by US authorities into suspected American tax dodgers.

A US District Judge in New York’s southern district has authorised the US Internal Revenue Service (IRS) to issue summons to several American banks to disclose record 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 the Butterfield Bank — a breach of US tax laws.

In addition, a number of US taxpayers with beneficial ownership and control over funds held in accounts at Butterfield Bank and ZKB have admitted failure to report income earned from their offshore accounts on their federal tax returns. The IRS said that other US taxpayers who held or presently hold similar accounts at ZKB, Butterfield, and their affiliates have done the same — a violation of federal tax law.

Manhattan US Attorney Preet Bharara said: “These actions show that the use of foreign banks for tax evasion remains a high investigative priority of this Office and US citizens should understand that loud and clear.

“By issuing these John Doe summonses, we continue our joint efforts with the IRS to identify and hold accountable those who try to evade their legal responsibility to pay taxes.”

A spokesman for the Butterfield Bank said last night: “Butterfield has not been contacted by US authorities with regard to their reported request to certain US-based banks about correspondent bank accounts.”

But he added: “We intend to cooperate fully with authorities and our correspondent banks in regards to this matter, whilst adhering to the laws of the jurisdictions in which we operate.”

US District Judge Richard M Berman earlier this week gave the green light to the IRS to issue summonses requiring Mellon, Citibank, JPMorgan Chase Bank, HSBC Bank USA, and Bank of America to produce information in connection with undisclosed accounts at Butterfield and its affiliates in the Bahamas, Barbados, Cayman Islands, Guernsey, Hong Kong, Malta, Switzerland, and the United Kingdom and at Swiss-based ZKB.

The court granted the IRS permission to serve what are known as “John Doe” summonses on Mellon, Citibank, JPMorgan, HSBC, and Bank of America.

The IRS uses John Doe summonses to obtain information about possible tax fraud by individuals whose identities are unknown. The John Doe summonses means the banks have to produce records identifying US taxpayers with accounts at ZKB, Butterfield, and their affiliates, including other foreign banks that used ZKB and Butterfield’s US correspondent accounts at Mellon, Citibank, JPMorgan, HSBC, and Bank of America to service US clients.

Assistant Attorney General Kathryn Keneally added: “These cases once again demonstrate the Department’s resolve to uncover and identify taxpayers who tried to hide money overseas as a way to avoid federal taxes.

“These John Doe summonses will provide information about individuals using financial institutions from Switzerland to the Cayman Islands to Hong Kong to avoid their US tax obligations.

And she warned: “US taxpayers still holding accounts who have not come clean should come forward and do the right thing before it’s too late.”

IRS Acting Commissioner Danny Werfel said: “International issues remain a major focus for the IRS, and we are continuing our efforts to fight tax evaders who use offshore accounts to skirt the law.

“These John Doe summonses for correspondent account records show our determination to pursue evaders using offshore accounts even if the person hiding money overseas chooses a bank that has no offices on US soil.”

US Federal tax law requires US taxpayers to pay taxes on all income earned worldwide.

American taxpayers must also report foreign financial accounts if the total value of the accounts exceeds $10,000 at any time during the calendar year.

Failure to report a foreign account can result in a fine of up to 50 percent of the amount in the account at the time of the violation.

The IRS runs an Offshore Voluntary Disclosure programme which allows US taxpayers to resolve their tax liabilities and minimise their chances of criminal prosecution by voluntarily disclosing previously undisclosed foreign accounts and income. In December 2012, three employees of ZKB were indicted for conspiring with US taxpayers and others to hide at least $423 million from the IRS in secret Swiss bank accounts.