By Jonathan Davies

HSBC is closing all accounts in Jersey belonging to people living the UK.

It is part of a move by UK banks to check the identities and addresses of thousands of customers on the Channel Islands.

HSBC said it was taken steps to prevent its services being mis-used. It comes weeks after the bank became the centre of a tax scandal in which it was revealed that the bank helped hundreds of customers to avoid paying tax in the UK by using its Swiss business.

The move by UK banks comes as a result of increasing pressure, both political and public, to ensure off-shore bank accounts can't be used to hide tax from HMRC.

HSBC has told its Jersey account holders to visit a branch with their passport and details of their address or their account may be closed.

Jersey's Chief Minister Ian Gorst told the BBC that banks "have to comply with the legislation that we have in place".

"They strongly have to know who their customer is, where the funds have come from, (and) what they are doing with the funds," he said.

"If they are not able to able to satisfy themselves around those regulatory issues then they have to take decisions to close those accounts."

Drugs and fraud

In 2012, HMRC launched an investigation into HSBC's activities in Jersey following allegations of money laundering and tax evasion by UK residents.

At the time, the Daily Telegraph reported that as many as 4,000 British residents held an account with the bank in Jersey, including a well-known drug dealer and bankers facing fraud allegations.

HMRC is hoping to raise £10m-£20m in unpaid taxes and fines as a result of the investigation.