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US client tax indictment raises pressure on HSBC

NEW YORK (Reuters) US authorities have charged an Indian-American client of HSBC Holdings with evading US taxes through the global bank’s India operations, increasing pressure on Europe’s second largest bank over its offshore private banking services.Federal prosecutors in Milwaukee filed a superseding indictment against Arvind Ahuja, a neurosurgeon in Greendale, Wisconsin, that fleshed out details of HSBC’s work with Americans born in India and highlighted the role of two unnamed HSBC bankers in New York.Ahuja was indicted in June for tax fraud involving more than $8.7 million hidden in an Indian branch of HSBC.Court papers say that over 2006 through 2009, Ahuja failed to report to the Internal Revenue Service more than $1.2 million in interest income he earned from the account, as well as to disclose the account’s existence to the IRS, as required by US law.The superseding indictment signals a ramping up of pressure on HSBC and could lead to charges against two unnamed bankers listed in the new filing, based on past procedures.Neil Brazil, a spokesman for HSBC, declined to comment, citing the bank’s policy of not speaking about ongoing investigations.The indictment is part of a broadening US investigation into Swiss and Swiss-style banks that sell offshore private banking services that enable American clients to hide income offshore and evade US taxes.The probe has widened to include Israel and India.In 2010, the Justice Department mailed “target” letters to around 50 Indian-Americans with offshore bank accounts, telling them they were under scrutiny for suspected offshore tax evasion through accounts in India.In April, the US. Justice Department asked a federal court for permission to force the bank to turn over the names of wealthy Indian-American clients suspected of evading taxes through offshore accounts at the bank’s operations in India.HSBC is based in London but has Swiss-style private banking services around the world.