According to the Financial Times, Lloyds took the decision after asking the customers to prove their identity for three years.
The bank was forced to take action at the end of last year to meet rules on money laundering in Jersey, where its international business is based, the newspaper reported.
HSBC Holdings PLC (LON:HSBA), Royal Bank of Scotland Group PLC (LON:RBS) and Barclays PLC (LON:BARC) are also said to have toughened controls in Jersey. The lenders sent similar letters to check the identities of customers but only closed a small percentage of accounts.
The news comes amid increasing pressure on global banks to meet tighter rules on financial crime. Guernsey, Jersey and the Isle of Man have agreed to provide clearer information about company ownership in the tax havens after UK MPs and financial transparency campaigns attacked efforts to prevent money laundering.
Lloyds’ international business provides financial advice and consumer and private banking services to Channel Island residents and expatriates. While the bank does not disclose customer numbers, the FT said the frozen accounts represented less than 5% of its total number of expatriate accounts.