The following item is an excerpt from Rubinstein & Rubinstein, LLP:

January 29, 2012

 U.S. Clients Not Welcome at Offshore Banks

We’ve been keeping a tally of foreign banks that no longer welcome U.S. clients.  While UBS and Credit Suisse have been closing offshore accounts for U.S. clients and transferring the clients to on-shore, tax-compliant divisions, other offshore banks have been firing U.S. clients outright.

Banks that no longer welcome U.S. clients include:  Clariden Leu (Switzerland), Mirabaud & Cie (Switzerland), Basler Kantonalbank (Switzerland) Mizrahi Tefahot (Israel), Bank Hapoalim (Israel), LGT (Liechtenstein) and Liechtensteinische Landesbank (Liechtenstein).  These firings are happening notwithstanding years-long banking relationships and many years of fees paid by the clients.

In other cases, foreign banks are willing to keep U.S. clients, but only if they provide evidence of U.S. tax compliance, such as Form W-9.  Most recently, Aargauische Kantonalbank advised clients that for the banking relationship to continue, the client must present evidence of tax compliance.  Interestingly, while Basler Kantonalbank is firing U.S.. clients outright, Aargauische Kantonalbank still welcomes tax-compliant accounts.

The Foreign Account Tax Compliance Act (FATCA) will introduce additional requirements applicable to foreign accounts.

Still, having a foreign bank account is not illegal, provided it is tax-compliant.  And, there are many legitimate reasons to have a foreign account:  international trade and business income; ownership of foreign assets including real estate; international investment diversification; currency trading; providing money to relatives in foreign countries; children studying abroad.