Bermuda’s biggest bank has admitted it quizzes customers who take out large amounts of cash on what they want it for.

HSBC said it routinely asks questions of people before it hands over their money to cut down on the risk of money-laundering or fraud.

A spokeswoman for the bank said: “We do have a responsibility to track and monitor financial transactions, knowing that cash presents more risk, and in particular financial crime risk, than other payment methods.

“Cash transactions also offer very little protection should things go wrong, which is why we will ask our customers about the purpose of significant or large cash withdrawals.”

The UK arm of the bank sparked protests last month after it was revealed it had brought in a new policy last November. Bank customers in the UK who ask for large cash withdrawals now face a grilling from counter staff and can even be asked to provide written confirmation of why they need the money.

One UK HSBC customer who last month tried to withdraw £7000 ($11,477) from an instant access savings account to repay a family loan was told he could not have the cash.

The man — an HSBC customer for 30 years — was told he would need to produce a letter as proof.

And, at another branch, a man who tried to withdraw around £1000 ($1639) in cash from his account was blocked, despite having more than £50,000 (almost $90,000) in his account.

The HSBC Bermuda spokeswoman refused to say what level of cash withdrawal in Bermuda would trigger questions. She added: “Our customers should be assured that they have full access to their cash.

“As a matter of course, our front line staff routinely validate the identity of our customers prior to facilitating all banking transactions.”

And she said: “We believe that asking the right questions, protecting our customers and reducing the risk of money-laundering, fraud and other crimes means that we are doing the right thing, while fulfilling our responsibilities as a global bank in the Bermuda market.”

HSBC two years ago paid more than $2 billion to settle money-laundering allegations in the US.

UK banks now routinely ask customers for 24 hours notice for large cash withdrawals of £5000 (around $8200) or more. British Bankers’ Association executive director Eric Leenders said: “There is a clear tension between, on the one hand, providing customers easy access to their money and, on the other hand, protecting customers from the threat of a fraud that could have a devastating effect on someone’s finances.”