A new law, expected this year, would apply a 30 per cent withholding tax on US income of overseas financial institutions if they do not report US account holders.

Steven Musher, associate chief counsel for international affairs at the IRS, reportedly said on the sidelines of a foreign bankers’ meeting in Washington: "I don't know how many millions it would be, but can you imagine trying to go account by account?"

Mr Musher had said earlier that the IRS would be looking at banks' "macro processes" rather than expecting them to meticulously identify their millions of accounts.

His comments come at a time when reports have said that the US authorities, who have been embroiled in a high-profile criminal and civil case against Switzerland's UBS, are now chasing account holders in other non-US banks besides UBS. UBS, Julius Baer and Wegelin have ceased to offer offshore private banking for US clients. It is reported that authorities are investigating up to 7,000 accounts.