In response to increased scrutiny of offshore bank accounts by U.S. authorities, Bank Leumi, Israel’s biggest bank, is requiring U.S. clients to declare their deposits to the IRS. The bank is asking its clients to declare that they are not U.S. clients, or to reveal their accounts to U.S. authorities, according to a letter to clients. “We operate in every place and at all times in accordance with the legal and regulatory guidelines,” a bank spokesman said. The Leumi letter comes as authorities prepare to implement the Foreign Account Tax Compliance Act, putting pressure on foreign banks to be accountable for U.S. clients, with a threat of penalties if they do not.
Other foreign banks are sending clients similar warnings. The winding down of the UBS case has revived speculation over which banks U.S. authorities will target next. As we wrote before, some clients of HSBC, Europe’s biggest bank, received letters in June from the U.S. Justice Department notifying them that they are targets of a criminal probe.