Well, it really IS beginning. Three weeks from tomorrow, FATCA begins. Apparently our compatriots in Mexico are about to be hit in a very big way.
None has been so far reaching as this notice sent to US citizens who have accounts at Banamex USA in Mexico this week, however.
Banamex USA’s parent, Banamex, is the second largest bank in Mexico and there are over 1 million US citizens living in Mexico, by far the largest amount of any country, and so this news will be felt over a very widespread area.
Notices have begun to be sent by Banamex USA, a bank operating in Mexico and used by many American expats in Mexico, to all US citizens notifying them that their accounts will be closed within 30 days.
Here, here and here you will find three separate online discussions surrounding Banamex USA’s summary closure of American’s accounts.
In most of the forums people know the reason why – FATCA – but in one of the forums in particular the people are not even aware of FATCA and its implications. This action by Banamex USA is, of course, because of FATCA, which has forced 77,000 banks in 70 countries to surrender all information on American customers to the Internal Revenue Service (IRS) or be extorted and possibly put out of business altogether.
Banamex USA, a subsidary of Citibank with its headquarters in Los Angeles, has sent letters to many US customers informing them that their accounts will be closed June 30. As one online commenter wrote:
“No more SS check deposits: no more linking of accounts to Banamex Mexico, no more credit card, no more ATM for free, no more nada.”
One customer was told that it was a “bank decision” with no reason given why. This move has left former account holders scrambling to find a bank that will let them open an account without their presence in Mexico, something likely impossible to find.
It does not appear that all accounts will be closed, but nobody knows Banamex USA’s strategy here, even banking insiders in the US who we have contacted who are confused about what is going on.
What’s for sure is this: Are you an American expatriate living abroad or an American currently thinking of moving abroad? This could and likely will happen to you.
cross-posted from Maple Sandbox
Thanks for your thoughtful reply and explaining the situation down there. I can understand that cash is an easier way to go and can’t imagine trying to live like that without a local bank account. May I ask if that is just a personal preference? Are expats there generally aware of the need to file tax and information returns to the US? It sounds as well, that many are retirees and have not chosen to take on Mexican citizenship? Interesting difference in attitude – :news is rarely as good or bad as first reported.” I guess it depends upon what one hears!
Since the Swiss debacle 2008-9, we have heard about bank accounts being closed, refusal to renew mortgages, spouses putting themselves in a position of financial ruin by taking their names off accounts in order to keep their homes. Since many here in Canada are duals, we are furious that our government has sold us out, as well as our spouses and sometimes-dual kids. Sounds like the demographics are possibly quite different between Mexico and Canada.
This is likely my last post here, we have covered it for now. You had three questions, so here goes:
1. Bankers are my least favorite characters to have a personal relationship with after politicians.. The US Bank still works for me, so I am not muddying the waters here.
2. Expats, like all living Americans are the worlds experts in filing taxes with the IRS, don’t worry on that score.
3. US citizens take some pride in not being subjects of the realm, but deep down we know the Federal government owns us till we die. Dual citizenship is not an option for most and it would take decades to get clear of the IRS after a change in citizenship to another country. Most people here don’t think in terms of what they will be doing in 2030–its the retirement perspective.
1) easily can concur with that
2) cannot say the same for those in Canada nor Europe. So many did not/do not know and are in jeopardy
3) I can say I did not know that and once I did, I got out. Good luck!
The issue John raised about clearing cheques is not a new one. I posted here about a year ago when I received a notice from my bank saying that they would no longer be able to accept USD cheques as payment. Their notice was prompted by the fact that HSBC and JPMorgan had ceased to clear any USD cheque anywhere outside the US. The result is that you have to use a wire transfer.
Since I am a deeply cynical person, I assume that the reason this is happening is that the US government wants the banks to be able to act as the interrogator for any transaction in USD that is heading outside the US before it happens and so they have a better electronic tracking mechanism. With a cheque, the bank has to honour the wishes of the payor by transferring the money to the payee. However, if you try to originate a wire transfer the bank can, and often will, interrogate you on the purpose of the transaction (especially if it is large or going outside the US). I spent an hour on the phone once trying to get Fidelity in the US to do a wire transfer before giving up. Now I won’t have that option. Their questions were intrusive and none of their business. They wanted to know who the account belonged to, who the beneficiary was (if different), what the purpose of the transfer was, how the funds would be used by the beneficiary etc.