Lloyds Bank Freeze 8000 Non-Compliant Accounts

In an attempt to meet strict international regulatory standards, Lloyd’s Banking Group have this week frozen an estimated 8000 bank accounts, in both Jersey and the Channel Islands.

This is due to failure to provide information requested with regard to the tax residency of the account holder.

In this article, we explore the reasons for this action and why this may become a common occurrence in the future.

Read on to find out more about this development or hit a jump menus below to skip to a relevant chapter.


Chapters

  1. Why Has This Happened?
  2. Offshore Accounts Under the Spotlight
  3. What To Do Next?
  4. Speak to Us or Comment!

Why Has This Happened?

This action has been taken as part of a global initiative to crack down on money laundering through the introduction of the Automatic Exchange of Information (AEoI) and Common Reporting Standard (CRS).

It is important to note that Lloyds are not alone in taking action.

Other financial institutions such as HSBC, Deutsche Bank, Barclays and the Royal Bank of Scotland have announced that they are to take similar measures as they race to become compliant with international legislation regarding tax transparency.

Unfortunately, it may be those crew members with offshore holdings who have not yet responded to their banks request for information who may be dragged in to this process.

Since the introduction of the AEoI in 2014, banks around the world have been required by law to hold details of their clients’ tax residency status.

As such you may have received a letter requesting these details at some point in the last 5 years.

This initiative has been introduced with the purpose of identifying previously undetectable tax-evasion.

Offshore Accounts Under the Spotlight

Since the initial announcement of the AEoI, financial affairs in Guernsey, Jersey and the Isle of Man have been the subject of increased focus, along with many other tax havens around the world.

After 3 years of requests from Lloyd’s Bank for their clients to provide up-to-date information, and growing pressure from international regulators, the decision was made to freeze these accounts until accurate information could be provided.

Although the 8000 frozen LBI accounts represent less than 5% of their clientele, this highlights a change in the culture in the offshore banking sector.

Furthermore, it is not just personal banking that will be affected.

Deutsche Bank have announced that up to 1000 of its corporate clients will face a similar fate if they fail to provide the information which has been requested.

The Jersey Financial Services Commission announced early this month that they plan to implement further measures in order to comply, amidst rising pressure from British MPs.

This could prove costly for expatriate clientele who keep their holdings in international accounts.

What To Do Next?

If you have received correspondence from your bank requesting information with regard to your tax residency, it is now vital that you respond promptly and with details which are correct to the best of your knowledge.

If you are unsure if you have received correspondence, your bank will be happy to advise as to whether your records are up to date.

Speak to Us or Comment!

If you are one of the many seafarers who remain unsure of their tax residency status, you can contact us to gain a better understanding of your position.

Get in touch with us today or let us know your thoughts in the comments section below.


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The Importance of Voluntary Disclosure


Any advice in this publication is not intended or written by Marine Accounts to be used by a client or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party matters herein.

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