Earlier this week, I was reading an article on The Nestmann Group’s website entitled “Why FATCA Is a Train Wreck Waiting to Happen.” Offshore expert Mark Nestmann was discussing the Foreign Account Tax Compliance Act (targets tax non-compliance by U.S. taxpayers with foreign accounts by focusing on taxpayer and foreign financial institution reporting) when he wrote:
Not surprisingly, FATCA and numerous other laws that require FFIs to enforce US money laundering, anti-terrorism, and securities regulations have led most of these institutions to fire their US clients. Perhaps one in 10 – and possibly fewer – non-US banks still permit US citizens or permanent residents to open accounts…
(Editor’s note: Bold added for emphasis)
None of this should come as a surprise to regular readers of Offshore Safe Deposit Boxes. I blogged back on October 16, 2014:
If you’re a U.S. citizen, I understand it’s getting darn near impossible to open a safe deposit box at a foreign financial institution these days. From The Wall Street Journal’s Laura Saunders (who I’ve mentioned before on this blog) a couple weeks back:
Americans living abroad are being cut off by banks and brokerages as financial institutions seek to steer clear of a U.S. crackdown on money laundering and tax evasion…
Several factors are contributing to the squeeze. One is the Foreign Account Tax Compliance Act, called Fatca.
Congress enacted it in 2010 after learning that foreign banks, especially in Switzerland, had profited by encouraging U.S. taxpayers to hide money with them abroad. The main provisions of Fatca took effect in July.
As a result, foreign financial firms must report to the Internal Revenue Service investment income and balances above certain thresholds for accounts held by U.S. customers. Nearly 100,000 banks and other companies have registered with the IRS. If they hadn’t, all their customers would have 30% withheld from income received from U.S. sources, such as interest and dividends.
Still, many registered firms are closing accounts for Americans abroad or declining to open new ones, in order to avoid increased compliance costs and the consequences for potential errors…
(Editor’s note: Bold added for emphasis)
Like I said later on in that same post:
At least a non-bank safe deposit box in an offshore private vault may be an option for the disenfranchised.
Still, when it comes to common banking needs (financial accounts), it sounds like a number of Americans- particularly those studying or working abroad for an extended period of time- might be out of luck if there’s no overseas branch of a U.S. bank nearby.
By Christopher E. Hill
Offshore Safe Deposit Boxes (www.offshoresafedepositboxes.com)
Source:
Nestmann, Mark. “Why FATCA Is a Train Wreck Waiting to Happen.” The Nestmann Group. 20 Jan. 2015. (http://www.nestmann.com/why-fatca-is-a-train-wreck-waiting-to-happen#.VMcT0C6PP48) 29 Jan. 2015.