An alarming amount of American expats and people living abroad are being cut-off by their banking institutions and brokerage firms as the United States seeks to curb money laundering and tax evasion issues.
The normal challenges of expats living abroad, adapting to a foreign culture, being far from family and familiar surroundings – now are being tested to the limits by dubious U.S. laws that scrutinize banking preferences.
Those living in the Philippines are no doubt going to feel the effects of such scrutiny as money laundering issues in the country are prevalent. In past years it was and still is fairly easy to hide money throughout different banking and holding companies that bury paperwork and profits for a fee. This alone has prompted the U.S. to bring about harsh laws, many unfair for the common person to deal with.
Many foreign banks are refusing bank accounts to those applying abroad. U.S. regulatory changes are the number one reason many institutions are backing away from possible clients as many do not want to deal with the strong arm of the U.S. crackdown.
To make matters worse, those living abroad are finding out their American financial institutions are closing their banks once it is learned that they are living abroad.
Much of the trouble began with the crackdown on offshore accounts and big money people hiding profits in places that normally are known to hide such wealth.
Today 7.6 million U.S. citizens are living outside the country. That staggering amount leaves much to the imagination when thinking as to why the U.S. is hell bent on finding every penny they can. “The reality on the ground is that overseas Americans are facing restrictions and lockouts from both U.S. and foreign financial firms,” said Marylouise Serrato, the director of American Citizens Abroad, the leading group representing U.S. expatriates.
Immunity from such issues are not pointed in one direction, in fact it is a problem from the wealthy living abroad all the way to the common workers and those just trying to live outside a country due to political turmoil etc.
No matter the situations, the financial institutions are said to be weighing on the possible risks and burdens they must suffer to take you in as a client. Many banks are simply saying ‘no thanks’ and passing on any possible problems, now or in the future.
One of the biggest problems with expats living abroad, the 2010 “Foreign Account Tax Compliance Act,” also known as FATCA, puts pressure on foreign banks, especially Swiss banks, making them reveal the accounts of Americans that hid money from the U.S. long ago. The initiative of FATCA took full effect this past July 2014. The results of that effect are that 100,000 banks around the world must report the financial situations to the Internal Revenue Service. Those reports are noted for many that have, hold or make a certain amount of income and put it in foreign entities. To force the banks to listen the U.S. threatened to withhold 30% of all their customers, so to comply they are forced to give up the names, incomes and locations of those banking in these certain countries.
This ultimate form of thuggery is nothing more than the Al Capone way of doing business. But those that refuse to bow to the U.S. are simply not taking any new customers into their systems, and to add insult to injury, they are once again cutting long-term customers off by closing their accounts.
Even those that are using ‘day trading’ or ‘overseas investors’ are being turned away by forcing those living off that means to create fictitious accounts through family and friends. Some ‘day traders’ and mutual fund traders have been completely shut off from the reality of making money while living abroad.
Firms are paying their employees to sift through accounts, churning up anything that proves that the holder of the account is living abroad, all the while using a U.S. address. These financial institutions are even checking on the ISP addresses of those logging onto their accounts.
Banks like Credit Suisse and BNP Paribas both agreed to pay billions in fines for aiding U.S. tax evasion issues within their banking facilities. These kinds of fines have prompted many to just toss people from their books and get rid of the problem all together. Credit Suisse paid $2.6 billion in fines and BNP Paribas paid a whopping $9 billion, a staggering sum that makes those companies wanting nothing to do with expats and those opening accounts abroad.
Numerous expats are frustrated and many are looking for solutions with less and less of them being available to the masses. If anything the thuggary of the IRS is going to get much worse, creating havoc if not total withdrawal of citizenship in the U.S.
In recent decades hundreds of thousands of people have given up their U.S. citizenship for ease of compliance, taxes and other problems associated with a country trying to strong-arm the entire world into its long-arm compliance regulations.
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