US citizens finding it difficult to open bank accounts
Some banks might even cease to provide banking to American residents
Published Monday, February 18, 2013Some banks might cease to provide banking services to their American customers, while others are reported to refuse new customers based on their American nationality.
Why?
Supposedly, the recently enacted Foreign Account Tax Compliance Act (Fatca) by the US government is the reason for banks to close its doors to US citizens.
Since January 1 this year, all foreign financial institutions must report or disclose financial accounts and investments, balances, receipts, and withdrawals held by US persons/taxpayers or held by foreign entities in which US persons/taxpayers hold an ownership interest directly to the US Inland Revenue Service (IRS).
When institutions fail to report or disclose information the consequences can be grave, one of the penalties being the withdrawal of US Dollar clearing rights in New York, a penalty feared by banks.
“For a bank which operates in the United Arab Emirates which has its currency linked to the US dollar this would be nothing short of catastrophic,” wrote a bank in a letter to its American account holders.
In the same letter, it implies that the recently enacted law might lead the bank to decide to cease operating bank accounts for US citizens: “While we await further clarification from the IRS regarding reporting requirements, it appears on the face, that these will be onerous and will involve substantial costs for [the] bank in terms of people, process and systems.
“The bank is currently reviewing its options – one of which is to cease banking for individuals who fall under Fatca regulations. We are hopeful that it will not be necessary to adopt this course of action but it will depend a great deal on the requirement placed on the bank in continuing to maintain accounts for individuals covered by Fatca.”
Meanwhile, US citizens are reported to have been refused by banks when they wanted to open a new bank account. A woman speaking on an online forum for expats living in the UAE said that she, being an American citizen, tried to open an account at a bank but was flatly refused without a reason being given.
Iceland does also discriminate based on nationality (even though it is forbidden by the constitution!).
My wife is Chinese, but lives in Iceland, works in Iceland and does all her banking in Iceland. She does however not hold an Icelandic citizenship (yet).
I can through my home bank open savings accounts along with many other functions (increase/decrease my overdraft etc).
She wanted a savings account the other day – she does banking in the same bank as I do. She couldn’t through her home bank. She had to physically go to the bank, fill out statements about not being a money-laundry operation along with lots of personal information. – It’s not like she was unfamiliar to the bank – she has her wages go there every week.
Fear of foreigners seems to be creeping up everywhere. I’ve seen the other side of the fence myself travelling abroad (China, Denmark, UK).
Shit has already hit the fan – I’m jusst sitting here waiting for the force-feedback….
An English newspaper in HK (the same one that ran the BS year-old internet rumour about how Chinese netizens love FATCA) is today running a story about discrimination in banking against Pakistanis in HK. Which is more-or-less legal (discrimination by ethnicity is prohibited by the Race Discrimination Ordinance, but discrimination by citizenship is prohibited).
http://www.scmp.com/business/money/article/1150993/local-banks-refuse-accounts-poor-and-ethnic-minorities
So that should point to the obvious future for Americans in HK. With no constitutional protections like in Iceland or laws about access to basic banking services like in Canada, a lot of Americans here are going to be banking either under their mattress, or at Citibank (which as a foreign branch of a US bank I believe is exempt from various onerous provisions of FATCA).
aaagh, that should say, discrimination by citizenship is permitted by the Race Discrimination Ordeinance
I’ve been waiting and waiting and waiting patiently to get news about my citizenship application here. The preferred route is relinquishing US citizenship, but if I get a letter like this, then I have no other choice but to schedule a meeting at the consulate and flat-out renounce.
CONGRATULATIONS US POLITICIANS! YOU CREATE THE MOST ABSURD LAWS AND FORCE PEOPLE TO TURN THEIR BACKS ON THEIR BIRTHPLACE!
Is this not how the Roman Empire began its long decline and collapse? Over-extending itself beyond manageable borders while its citizenry and politicians amused themselves to death? It wasn’t just Nero who played the fiddle – the entire populace was guilty of willful denial. Too many parallels with America today to ignore.
The USG, in its unique policies, is making it impossible for its citizens to thrive while living abroad. It is systematically causing the extinction of its own citizens by forcing them to renounce US citizenship. US consulates are certainly aware of the increase in renunciations, at this point one can only assume that the USG doesn’t care.
@bubblebustin, the US government does care, but not the way that we would prefer it to. Rather, it is likely censuring renunciation figures to avoid civil war or mass emigration. It seems to believe that the masses can be controlled through misinformation.
I wonder how the administrative staff at the consulates who are swamped with inquiries, renouncement and relinquishment appointments, follow-up work etc. etc. feel about the deliberate falsification of CLN statistics by the USG. It seems like a slap in the face to them as well. It wouldn’t surprise me if the lady who handled my renunciation hadn’t handled 45 cases in the last quarter of 2012 on her own.
@swisspinoy
I see. They care enough to misrepresent the facts, proving that it is not oblivious to what’s happening.
Looks like my comment won’t get published, so I’ll post it here:
http://blogs.angloinfo.com/us-tax/2013/03/18/living-overseas-how-to-properly-mail-or-send-tax-returns-to-the-irs/