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By Sarah Left, 14 September 1999 00:15

NEWS Banks creating online, offshore accounts must rely on the honesty of their users in complying with domestic tax laws, according to Lorcan Connolly, IT director at online bank, Fsharp. Connolly explained in an video interview with Silicon.com that his bank - located in the Isle of Man - aims its services at expatriates who qualify to put their money in tax-free, offshore accounts. However, he said there is a limit to what the bank can do to guarantee that customers actually reside outside of the UK. "Knowing our customer is very, very important to us," Connolly said. "It's part of the registration process. We obviously have legal and regulatory requirements on us to ensure that we know our customers. There's also a level of requirement on the customers to make sure they act in an appropriate manner in the jurisdiction they're operating in." Fsharp's service is one of the first to offer online banking in offshore accounts, according to the Financial Services Authority (FSA). It is not possible to open an account entirely online at the moment in the UK. Customers must provide paperwork proving their identity to the bank. But that may change in the future, said an FSA spokeswoman, with the introduction of digital signatures. The onus of proving a customer is where they claim to be is largely on the customer, agreed Andrew Rigby, solicitor with London firm, Tarlo Lyons. "The terms and conditions of the account will say that customers must satisfy themselves that they comply with all national and international laws," he said. "To some extent it is not the bank's problem if the individual is trying to dodge UK tax laws." The full video interview with Lorcan Connolly is available in the Finance Channel.