This comes as a surprise especially when India and Asia as a whole do not enjoy any reputation for banking secrecy. The only rationale for this could be that since investment in US treasury is not rewarding and Swiss banks are under scanner, India seems more likely to be the place where investments are being routed.
Many lawyers believe that it is likely that private banking in Asia are now on red alert for similar investigations into their businesses.
The Justice Department is using a similar approach as it had against UBS, namely the "John Doe" summons strategy. In cases where the prosecutor, the side representing the government, does not know the name of the person committing the crime, the case is filed under the name 'John Dee'. UBS, a Swiss bank had settled government charges against it by paying $780 million. It also gave the name of 5,000 of its clients to the United States government.
Its been reported that after the UBS case, many of the private bankers tightened their policies for dealing with American clients.
The new rules being introduced in U.S which is considered as part of its crackdown on tax evasion are designed to put the burden of disclosure on the bank rather than the client. It will not be surprising if this proves complex and costly, since it will be difficult to identify who all are eligible.
According to reports, HSBC had informed US officials that 9,000 accounts existed where the person had a separate account with HSBC USA and India. The IRS has apparently claimed to the court for only 1,921 accounts.
A section of the media reported that Daniel Reeves, the IRS"s senior adviser on offshore compliance, has submitted a written statement: “This indicates that thousands of United States taxpayers of Indian origin who maintain more than $100,000 in accounts with HSBC may have failed to disclose their HSBC India accounts to the United States government."
HSBC said that it had not yet seen the court filings, adding that it did not condone tax evasion and fully supported the US government in its effort to collect appropriate taxes.
It has been widely reported that the case against HSBC has got more attention after Vaibhav Dahake, an American citizen with an HSBC India account staying in New Jersey, pleaded guilty to tax evasion.