Americans living abroad are generally treated about the same as non-resident aliens. It can be very difficult for non-resident aliens, including Americans living abroad, to maintain a US bank account in the US. With non-resident aliens now being thrown out of American banks in America, non-resident citizens will likely be treated the same.
With such cross-border economic activity, fueled in large measure by the maquiladora industry in Juárez, it is only natural for foreign businesses to maintain U.S. bank accounts in El Paso. Unfortunately, many of these commercial accounts are being closed by U.S. banks. Why is this happening?
…The regulatory cost to U.S. banks to comply with the Patriot Act and reciprocal reporting obligations under FATCA agreements limit the profitability of maintaining deposit accounts for non-resident aliens, and expose U.S. banks to hefty penalties for regulatory failures, as in HSBC’s case.
So what does a U.S. bank do under such circumstances, particularly when foreign deposit accounts are a small percentage of your book of business? Close the accounts and focus on more profitable, less risky investments.
Foreign investors: Why US bank may close your account Sunday, October 6, 2013 6:00 pm
At least non-resident aliens can have a bank account where they live, unlike some non-resident citizens who are being denied local banking services as well as US banking services.
But, don’t worry, Americans. The Mafia Bank still accepts American clients and business is booming!
As far as I know without a residence in the U.S. you haven’t been able to have a bank account there for some time. I wanted to open one after the death of my mother since it was going to take a long while to figure out her situation and it would have been easier to have a bank account there until her affairs were settled. I presented a U.S. passport and wanted to open account with my brother and sister. I was not allowed to open it at all since I did not live there even though I was still a citizen at that time. I did not live there and so no go. I was surprised a citizen could not open a bank account. It was just the beginning of finding out how expats are treated as suspects no matter what they try to do. My brother who did not live in the same state was allowed to open one but, I was not.
I can have one where I live here in Canada of course checking, mortgage and savings. The problem was the U.S. treating those accounts as “off shore” though I live here and treating me as a suspect for being an American abroad. The only option left to me and my foreign spouse and child, in order to be treated as a law abiding citizen was to stop being American. With FATCA the paper wall around the country will be completed. No one will be able to leave and live outside the U.S. while still being a citizen unless they are uber wealthy.
I have a really hard time understanding how intelligent, educated people came up with such a system, voted it into law and then said “job well done” to themselves.
@Atticus
It’s not a question of intelligence. It’s a question of world view and operating assumptions. On this blog, we often talk about how U.S. citizens in other countries are “Trojan Horse” soldiers which will inflict pain on their countries of residence. There are Trojan Horse soldiers which are alive and well in the United States and have been very effective in the destruction of America.
On 911, it all changed for America. It has become increasingly clear that the purpose of 911 was NOT to attack NYC. The purpose was to activate the destruction of America from within. It worked like this.
On 911 two “Trojan Horse” Soldiers were activated by the attack on NYC.
Trojan Horse Solder # 1 was George W. Bush. His government enacted the Patriot Act which caused Americans to believe that they should have no rights and virtually eliminated rights in America. With a stroke of a pen, the Bush administration eliminated the rights and freedoms that were hard won. Of course, most Americans believed that this was good. The job of Bush was to ensure that Americans believed that they should NOT have rights.
Trojan Horse Soldier #2 was Barack Obama – “Bush on Steroids”. Once Americans believed that they should have no rights – The Obama administration enacted FATCA which was designed to seal the borders, create an Orwellian police state and ensure the orderly transition to a totalitarian Stasi like police state.
In 1984 Big Brother kept the focus on the enemies from outside so that people would not concentrate on the enemy from inside. In 2013, the U.S. focus and obsession on the enemies from outside, has keep discussion away from the enemies on the inside – the U.S. government itself.
America is absolutely unrecognizable!
Double plus good thought comrades!
@AtticusInCanada –
You said “I have a really hard time understanding how intelligent, educated people came up with such a system, voted it into law and then said “job well done” to themselves.”
Educated, maybe, but obviously not very intelligent people are running the US government now. Unfortunately, our governments in Canada are not much better. Both the government shutdown in Washington and the mess that has been made of transit planning in Toronto are recent examples. FATCA, DATCA, etc. are just more of the same. As Walt Kelly’s Pogo said years ago: “We have met the enemy and he is us.”
@UsCitizenAbroad –
I don’t agree with you that Obama’s intent is to create a police state, but I do agree that the US reaction to the 9/11 attacks has done far more damage than the attacks themselves, and the effects of that reaction are tending toward a police state.
One major sign of intelligence is the ability to foresee the consequences of one’s actions and predict accurately whether they will accomplish one’s goals. Collective decision making may start with simple goals (“combat terrorism”, “stop tax evasion”, etc.) but result in actions with such damaging unforeseen consequences that the initial goals are never achieved and only new problems are created. Unfortunately, intelligent people usually take time in their decision-making, which in politics is derided as hesitancy and indecision. Most voters tend to favour “bolder” though less intelligent leaders.
@AnonAnon
Whether by accident or whether by design the U.S. government is now in the service of America’s enemies.
Former Harvard Professor and Former Leader of the Canadian Liberal Party made the point that:
Atticus, I was able to open accounts last spring in my hometown. It was a local bank but they said they had customers living all over the world. The only catch was that you had to have a family member local who was also a customer, which was no problem for me as all my family banks at this organization and my father was once on their board of directors. But they were very strict on citizenship. They made sure that I was still a citizen. My relinquishing could be a problem in the future but I won’t need that account forever, so I will cross that bridge when I come to it.
Anon, I agree that Obama didn’t intend to create a police state, but he didn’t have to – it was already in place when he took office. Whatever his initial intentions were prior to becoming POTUS, he quickly succumbed to the lure of power and maintaining the cozy set-up of Bush/Cheney and expanding on it whenever possible. I think this reflects badly on his overall character but that’s just my opinion.
The USG turned out to be an easy patsy for those outside the country who would like to reduce or eliminate their world influence and reach. It took a mere decade to reduce them to the state they are currently in now. However, it’s death throes (like FATCA) are taking a toll on the world at large.
Thanks, USCitizenAbroad, for that link to the essay by Michael Ignatieff. It’s a very good essay. He may be an example of a person who is too intelligent to get elected to political office, although his arrogance probably also contributed to his defeat.
FATCA along with DATCA and US banks throwing out their small customers is continuing to isolate the US more and more. Someday on a country is going to say NO and that will be the beginning of people realising the US is having trouble throwing its weight around.
@ AtticusinCanada
I don’t understand the legal basis for not accepting non-US residents for accounts in US banks but I’d bet the very wealthy don’t have much problem with this. It seems particularly peculiar that US banks would reject American non-US residents. When my husband’s mother passed away it took a very determined and extraordinarily helpful bank manager to transfer her US account into his name but she managed to get it done somehow. The trouble is, my husband still hasn’t figured out the best manner and timing for transferring his inheritance to Canada. He wants to bring it home, obviously, but he doesn’t want to get into 8938 reporting territory — another form with the potential for innocent errors and then ding-ding, ka-ching, ka-ching, along comes the possibility for costly and disproportionate penalties. Truthfully we no longer feel we have the freedom to make any moves with our money because with all the surveillance and suspicion these days, you never know what will trigger a red flag and even more scrutiny. It’s outrageous that we have been made to feel this way because everything we have has been legally acquired, diligently reported and subsequently taxed. I wish I had saved it, but I once came across the list of “suspicious” indicators that bank clerks were supposed to report when dealing with customers. Even the type of clothing being worn by a customer could trigger a report. I guess it all goes to show that once your money is in a bank it is not your money anymore, it is the bank’s money. Canada and other western nations have the mechanism in place to “Cyprus” bank deposits although now it is called “bail-ins”.
http://www.globalresearch.ca/depositors-beware-theft-is-legal-for-big-banks-and-your-money-will-never-be-safe/5333631
Here’s a bit of that type of information, Em.
http://www.irs.gov/publications/p1544/ar02.html
http://www.fintrac.gc.ca/questions/faq/2-eng.asp
http://www.hmrc.gov.uk/mlr/your-role/suspicious-transaction.htm
People flocked to the polls in 2008 to vote against Bush. Some of them have begun realizing how big they lost that election.
Thanks Swisspinoy…
I will update my DATCA timeline with this story..
http://isaacbrocksociety.ca/2013/06/27/hr-2299-calls-for-withdrawal-of-fatca-iga-reciprocity-tool-datca-lite/comment-page-3/#comment-568408
Never heard the term “borderplex” before. Maybe it should be called “borderpox”.
This is thinking ahead which I hope does not jinx the expected CLN my husband should get eventually BUT, in general, AFTER a person has a CLN and filed all the IRS exit papers, will a US bank automatically withhold 30% when money is transferred to this person’s non-US bank. If the US bank does automatically withhold 30% will the CLN holding, former US citizen then need to file a Non-Res 1040 to recover it? In this case, does anyone think there could be a hassle involved in getting the money refunded by the IRS?
Em, although I’m not a lawyer, my understanding of FATCA is that the 30% withholding tax on funds transferred to a bank outside the US would apply only to money transferred to an account of a “US person”. I believe that the withholding is to be done by the bank that receives the funds, not by the bank sending the funds. So, after your husband has his CLN and has presented it to his bank (if they actually question whether he is a “US person”), his bank should not apply the withholding tax.
I hope someone who is more knowledgeable about this will correct me if I’m wrong.
@ AnonAnon
If that is the case, then anyone with money in a US bank should wait until after the CLN to transfer it to a non-US bank which would then not be able to withhold. I had it in my mind that the US bank would do the withholding. (Easier for the USG to get its grubby paws on it.) Very interesting, thank you. Of course this applies ONLY if FATCA is actually implemented which none of us wants to happen. All this uncertainty makes it very difficult for anyone to plan anything right now. Shame on the USA for throwing the world into even more chaos!
@Em
The latest is they (Congress) can’t even agree to kick the can down the road!
@Em,
A US bank can’t do the withholding, because the recipient is not necessarily a customer of theirs, and that bank won’t know if the recipient is a “US person”. That’s why the US is trying to implement FATCA — to make banks outside the US do their tax collecting for them. Only the banks outside the US are in a position to (try to) determine which of their customers are “US persons”. That’s one of the paradoxical effects of citizenship-based taxation — the US can’t keep track of where its citizens residing outside the US actually are and are doing their banking. So it wants the whole world to report that information to them, and we are witnessing what a mess that is creating.
@ bubblebustin
I know what I want to kick … and it isn’t a can.
Questions to US homelanders: “What do you think happens when you treat your expatriate citizens and former citizens as crime suspects and enemies? Is anybody there listening? Do you care?”
@bubblebustin
There’s a lot of complications to kicking the can down the road. For example, what kind of can is it? Is it a pop can, a beer can, a can of beans or more likely a can of worms?
Who is going to do the kicking? Will they use their right foot or their left foot. How far will they kick it. Where or at whom will they kick it?
The multitude of questions leads to just one conclusion. Instead of kicking the can, they should just drop the contents on U. S. Persons living outside of the U. S. That will fix the problem.
@AnonAnon, I’m sorry to say it, but no, America does not care. Expats have been getting a tiny bit of media attention lately, but I’m not getting the feeling as if this means anything in the US. The US still seems to very supportive of FATCA and expats are still seen as being the bad people. Some of the commentary has maybe become a bit less abusive towards Americans abroad, but that is about the only change which might be noticable.
@Hazy
Funny, except for the last part 🙁
By not kicking the can they’ll drop the contents on not only USP’s abroad but the ENTIRE world (including themselves).
@SwissPinoy
We are so far just an interesting anecdote, and in actuality don’t play a significant part in the whole process. The fact that our decisions to renounce are portrayed by Treasury to be misguided doesn’t help one bit.