Foreign banks are saying no to money from U.S. citizens and telling them to open accounts elsewhere
Jeffrey S. Freeman, J.D., LL.M
Being an American will help you get directions overseas, but the United States seal on your passport will not help you get a bank account. After watching numerous Swiss banks receive millions and billions of dollars in fines for aiding their clients in tax evasion many foreign banks are simply refusing to accept United States clients.
Thank you FATCA
Now legally in force, FATCA (Foreign Account Tax Compliance Act) was created by the United States to discourage and fight the war on tax evasion. FATCA requires foreign financial institutions (banks, insurers, and investment funds) to send the IRS information about offshore accounts of Americans. Financial institutions are held to strict rules and harsh penalties under FATCA and the easiest way to comply is to not have any U.S. clients. Despite leniency during the transition period from 2014-2015 some banks are making a strategic decision that is causing a headache for U.S. citizens living and working abroad.
A little Patience
Currently 5-6 million U.S. citizens are living abroad and holding bank accounts in foreign countries. Many of whom were notified that their account was closing due to their citizenship in the United States. No, this isn’t middle school, but you did get kicked out of the club for having the wrong flag. Have patience, not all banks are refusing to work with U.S. citizens like Deutsche Bank.
Look around, but do not give up hope if you are looking to open a bank account and are turned down. Additional paperwork proving your residence and employment will likely be requested by banks willing to work with you. As stressful as it may be to shop around to numerous banks, there is often a bank within the country that will be willing to work with you.
Time to Renounce?
Not all U.S. citizens that renounce their citizenship receive fancy write-ups online about them leaving the land of promise behind. In 2013 more than 3,000 Americans helped to set the record for the highest number of citizens renouncing citizenship. 2014 is set to meet that record with 1,000 renounces in the first quarter alone.
Renouncing citizenship is not such an easy thing and is not a way to escape unpaid taxes. Some are looking to just be able to open a bank account in the country they are living in. Average, middle class workers that may be abroad teaching English courses are choosing to give up their citizenship. Drastic measures, but to some it seemed like the right decision.
About Freeman Tax Law
Freeman Tax Law (FTL) is a boutique law firm consisting of a multi-disciplinary team of tax professionals including tax attorneys, CPAs and a professional staff that have vast experience with foreign tax compliance and regulatory matters for financial institutions. FTL consults with both FFIs and USFIs with regard to Foreign Account Tax Compliance Act (FATCA) and related regulatory matters and assists them developing procedures on how to comply with these laws.
Compliance with FATCA needs a distinctive approach. A simple change of processes or leveraging new IT infrastructure may not suffice. FTL has partnered with Newgen Software (Newgen) to offer a unique end to end solution for our clients to offer a comprehensive compliance strategy. Newgen buildings on two decades of domain expertise in Banking and Compliance along with its market leading BPM, Case Management, ECM and CCM applications. Utilizing Newgen’s FATCA Compliance Software along with the creation of proper procedures and training offered by FTL of the financial organization staff, allows for the creation of systematized approach to negotiating the finer aspects of FATCA.
With FATCA, the stakes of non-compliance are simply too high. Contact us today for a consultation to discuss how to further integrate your technology with the legal requirements of FATCA.
Freeman Tax Law