Maybe some of you finance wizards can break this down for us on a small pension. The way it sounds is that banks (for whatever reason) seem to be adding more hoops in normal transfers from overseas.
It's a long read and I hope I am just paranoid after my heart rate increased after reading the article.
http://online.wsj.com/articles/expats-l ... 1410465182
Banks starting to cut services?
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DeE
Re: Banks starting to cut services?
Not sure why the link above does not work.....I hope the copy and paste works.
Americans living abroad are being cut off by banks and brokerages as financial institutions seek to steer clear of a U.S. crackdown on money laundering and tax evasion.
The traditional challenges of expatriate life—adapting to a new culture, separation from family and friends—are being complicated by the tougher U.S. laws and more aggressive scrutiny of customer accounts.
It isn't what William Hart expected when he moved to Berlin from North Carolina nearly four years ago. This spring, the 24-year-old e-commerce analyst said he was rejected for an online brokerage account by Deutsche Bank AG DBK.XE -0.55% , although he has a checking account there and worked as an intern at the company. In addition, a smaller local bank turned him down for an online checking account, and he says Wells Fargo WFC +0.14% & Co., his U.S. bank, closed his brokerage account when it learned he lives in Germany.
The German banks gave U.S. regulatory changes as the reason, he said. A spokeswoman for Deutsche Bank and a spokesman for Wells Fargo declined to comment.
"I seem to exist in a no-man's-land," said Mr. Hart. "Can it really be that expats are facing such massive obstacles in basic financial matters?"
The Tax-Haven Crackdown
Read Wall Street Journal coverage of key points in Washington's five-year crackdown on offshore accounts: 5 Things to Read on the Tax-Haven Crackdown
Today, the answer is often "yes," say advocates for the estimated 7.6 million U.S. citizens living outside the country. "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.
Experts say a broad range of U.S. expats are affected, and that the wealthy and employees of multinational firms aren't immune. "The financial institutions weigh how lucrative the relationship is against the possible compliance risks and burdens," said Jonathan Lachowitz, an adviser at White Lighthouse Investment Management, a firm based in Massachusetts and Switzerland.
Several factors are contributing to the squeeze. One is the Foreign Account Tax Compliance Act, called Fatca. Congress enacted it in 2010 after learning that foreign banks, especially in Switzerland, had profited by encouraging U.S. taxpayers to hide money with them abroad. The main provisions of Fatca took effect in July.
As a result, foreign financial firms must report to the Internal Revenue Service investment income and balances above certain thresholds for accounts held by U.S. customers. Nearly 100,000 banks and other companies have registered with the IRS. If they hadn't, all their customers would have 30% withheld from income received from U.S. sources, such as interest and dividends.
Still, many registered firms are closing accounts for Americans abroad or declining to open new ones, in order to avoid increased compliance costs and the consequences for potential errors.
Allen Cutler is unsettled by changes to his U.S. investment account. Allen Cutler
Martin Karges, a senior director at BDO USA LLP in New York, said many companies are wary, because a bank official must sign a statement guaranteeing compliance with Fatca.
"Banks look at this from a liability perspective," he said. "The less the bank has to report to the IRS, the less risk there is."
Another factor is heightened enforcement of rules against so-called illicit finance, such as money laundering or financial transactions that breach U.S. sanctions. Enforcement is again intensifying after a pause during the financial crisis, making it more expensive or difficult to move money from one country to another.
Among those affected by the tightened policies are retirees of modest means in communities around Lake Chapala in Mexico, where an estimated 10,000 Americans live. "It hit people out of the blue," said Ann Lewis, 75, a former small-business owner from New Jersey, who was notified in late May that her account with Banamex USA, a unit of Citigroup Inc., C +0.77% would be closed this past June 30. A Citigroup representative declined to comment. Ms. Lewis said she found Mexican banks expensive and harder to work with: Checks can take weeks to clear while exchange rates fluctuate, she said, and wire transfers can each cost $45 or more.
Judith Furukawa, an American living in Dubai who has been an expat for nearly 15 years, is willing to pay fees to wire money from her U.S. account in Pennsylvania—but her U.S. bank no longer accepts wire requests from overseas.
Americans abroad are also encountering troubles with U.S.-based investment accounts. In recent months, firms including Fidelity Investments, Charles Schwab Corp. SCHW -0.24% , T. Rowe Price Group Inc. TROW +0.01% and others have told overseas investors and advisers they may no longer buy or trade mutual funds.
For Allen Cutler, a U.S. citizen who has lived in the Philippines for 30 years and said he had an account at T. Rowe Price for two decades, the restriction is "very unsettling, leaving me with the feeling that more is to follow."
A spokesman for T. Rowe Price said its customers abroad who already hold mutual funds at the firm can continue to do so.
Other firms have closed accounts outright, as happened with Mr. Hart, the Berlin resident. Some also appear to be checking online details to see where customers are logging in from, even if they claim a U.S. address, said Chad and Peggy Creveling, Bangkok-based financial advisers.
U.S. investment firms don't want to leave themselves open to charges that they are selling funds that aren't registered for sale abroad, said Mercer Bullard, a law professor at the University of Mississippi. Business reasons may also have prompted closures. "The regulatory excuse can be a screen for getting rid of unprofitable customers with smaller accounts," he said.
Mr. Bullard said the U.S.'s pursuit of wrongdoing by foreign banks has fueled fears of retaliation by foreign countries. In May, Credit Suisse CSGN.VX -0.31% Group AG pleaded guilty to aiding U.S. tax evasion and agreed to pay $2.6 billion. In June, BNP Paribas SA BNP.FR +0.48% pleaded guilty to violating U.S. sanctions and agreed to pay nearly $9 billion.
Some experts say the issues raised by Fatca could ease, because dozens of countries have signed on to a similar reporting standard designed to detect tax evasion by their own residents. As financial firms become familiar with these rules, "existing dislocations due to Fatca should fade over time," said Itai Grinberg, a law professor at Georgetown University in Washington.
However, issues due to greater enforcement of money-laundering and sanctions rules may persist, said Chip Poncy, who heads the Financial Integrity Network, a consulting firm. "Many firms are dropping categories of legitimate but higher-risk customers until they know how to manage the risks," he said.
Meanwhile, many U.S. expatriates are coping with restrictions by going to extraordinary lengths. For example, some customers say they are opening accounts at more than one U.S. bank with links to no-fee ATMs abroad, claiming the U.S. address of a relative or friend, and then rotating withdrawals among them, so they won't appear to be living outside the country.
Because Ms. Furukawa's U.S. bank won't accept overseas requests for wire transfers, she has developed a workaround. She wires money twice a month from her U.S. bank account, which is linked to direct deposits, to a credit union in the western U.S. She then moves cash from the credit union, which permits wire transfers overseas, to her bank account in Brussels.
In Berlin, Mr. Hart is stymied. Following the closure of his U.S. brokerage account and the rejection of his application for a German one, he says his investment funds are in a savings account earning 0.05%. "Investing just isn't an option right now," he said. "That's frustrating."
Write to Laura Saunders at [email protected]
Americans living abroad are being cut off by banks and brokerages as financial institutions seek to steer clear of a U.S. crackdown on money laundering and tax evasion.
The traditional challenges of expatriate life—adapting to a new culture, separation from family and friends—are being complicated by the tougher U.S. laws and more aggressive scrutiny of customer accounts.
It isn't what William Hart expected when he moved to Berlin from North Carolina nearly four years ago. This spring, the 24-year-old e-commerce analyst said he was rejected for an online brokerage account by Deutsche Bank AG DBK.XE -0.55% , although he has a checking account there and worked as an intern at the company. In addition, a smaller local bank turned him down for an online checking account, and he says Wells Fargo WFC +0.14% & Co., his U.S. bank, closed his brokerage account when it learned he lives in Germany.
The German banks gave U.S. regulatory changes as the reason, he said. A spokeswoman for Deutsche Bank and a spokesman for Wells Fargo declined to comment.
"I seem to exist in a no-man's-land," said Mr. Hart. "Can it really be that expats are facing such massive obstacles in basic financial matters?"
The Tax-Haven Crackdown
Read Wall Street Journal coverage of key points in Washington's five-year crackdown on offshore accounts: 5 Things to Read on the Tax-Haven Crackdown
Today, the answer is often "yes," say advocates for the estimated 7.6 million U.S. citizens living outside the country. "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.
Experts say a broad range of U.S. expats are affected, and that the wealthy and employees of multinational firms aren't immune. "The financial institutions weigh how lucrative the relationship is against the possible compliance risks and burdens," said Jonathan Lachowitz, an adviser at White Lighthouse Investment Management, a firm based in Massachusetts and Switzerland.
Several factors are contributing to the squeeze. One is the Foreign Account Tax Compliance Act, called Fatca. Congress enacted it in 2010 after learning that foreign banks, especially in Switzerland, had profited by encouraging U.S. taxpayers to hide money with them abroad. The main provisions of Fatca took effect in July.
As a result, foreign financial firms must report to the Internal Revenue Service investment income and balances above certain thresholds for accounts held by U.S. customers. Nearly 100,000 banks and other companies have registered with the IRS. If they hadn't, all their customers would have 30% withheld from income received from U.S. sources, such as interest and dividends.
Still, many registered firms are closing accounts for Americans abroad or declining to open new ones, in order to avoid increased compliance costs and the consequences for potential errors.
Allen Cutler is unsettled by changes to his U.S. investment account. Allen Cutler
Martin Karges, a senior director at BDO USA LLP in New York, said many companies are wary, because a bank official must sign a statement guaranteeing compliance with Fatca.
"Banks look at this from a liability perspective," he said. "The less the bank has to report to the IRS, the less risk there is."
Another factor is heightened enforcement of rules against so-called illicit finance, such as money laundering or financial transactions that breach U.S. sanctions. Enforcement is again intensifying after a pause during the financial crisis, making it more expensive or difficult to move money from one country to another.
Among those affected by the tightened policies are retirees of modest means in communities around Lake Chapala in Mexico, where an estimated 10,000 Americans live. "It hit people out of the blue," said Ann Lewis, 75, a former small-business owner from New Jersey, who was notified in late May that her account with Banamex USA, a unit of Citigroup Inc., C +0.77% would be closed this past June 30. A Citigroup representative declined to comment. Ms. Lewis said she found Mexican banks expensive and harder to work with: Checks can take weeks to clear while exchange rates fluctuate, she said, and wire transfers can each cost $45 or more.
Judith Furukawa, an American living in Dubai who has been an expat for nearly 15 years, is willing to pay fees to wire money from her U.S. account in Pennsylvania—but her U.S. bank no longer accepts wire requests from overseas.
Americans abroad are also encountering troubles with U.S.-based investment accounts. In recent months, firms including Fidelity Investments, Charles Schwab Corp. SCHW -0.24% , T. Rowe Price Group Inc. TROW +0.01% and others have told overseas investors and advisers they may no longer buy or trade mutual funds.
For Allen Cutler, a U.S. citizen who has lived in the Philippines for 30 years and said he had an account at T. Rowe Price for two decades, the restriction is "very unsettling, leaving me with the feeling that more is to follow."
A spokesman for T. Rowe Price said its customers abroad who already hold mutual funds at the firm can continue to do so.
Other firms have closed accounts outright, as happened with Mr. Hart, the Berlin resident. Some also appear to be checking online details to see where customers are logging in from, even if they claim a U.S. address, said Chad and Peggy Creveling, Bangkok-based financial advisers.
U.S. investment firms don't want to leave themselves open to charges that they are selling funds that aren't registered for sale abroad, said Mercer Bullard, a law professor at the University of Mississippi. Business reasons may also have prompted closures. "The regulatory excuse can be a screen for getting rid of unprofitable customers with smaller accounts," he said.
Mr. Bullard said the U.S.'s pursuit of wrongdoing by foreign banks has fueled fears of retaliation by foreign countries. In May, Credit Suisse CSGN.VX -0.31% Group AG pleaded guilty to aiding U.S. tax evasion and agreed to pay $2.6 billion. In June, BNP Paribas SA BNP.FR +0.48% pleaded guilty to violating U.S. sanctions and agreed to pay nearly $9 billion.
Some experts say the issues raised by Fatca could ease, because dozens of countries have signed on to a similar reporting standard designed to detect tax evasion by their own residents. As financial firms become familiar with these rules, "existing dislocations due to Fatca should fade over time," said Itai Grinberg, a law professor at Georgetown University in Washington.
However, issues due to greater enforcement of money-laundering and sanctions rules may persist, said Chip Poncy, who heads the Financial Integrity Network, a consulting firm. "Many firms are dropping categories of legitimate but higher-risk customers until they know how to manage the risks," he said.
Meanwhile, many U.S. expatriates are coping with restrictions by going to extraordinary lengths. For example, some customers say they are opening accounts at more than one U.S. bank with links to no-fee ATMs abroad, claiming the U.S. address of a relative or friend, and then rotating withdrawals among them, so they won't appear to be living outside the country.
Because Ms. Furukawa's U.S. bank won't accept overseas requests for wire transfers, she has developed a workaround. She wires money twice a month from her U.S. bank account, which is linked to direct deposits, to a credit union in the western U.S. She then moves cash from the credit union, which permits wire transfers overseas, to her bank account in Brussels.
In Berlin, Mr. Hart is stymied. Following the closure of his U.S. brokerage account and the rejection of his application for a German one, he says his investment funds are in a savings account earning 0.05%. "Investing just isn't an option right now," he said. "That's frustrating."
Write to Laura Saunders at [email protected]
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Gaybutton
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Re: Banks starting to cut services?
It worked for me.DeE wrote:Not sure why the link above does not work.
I always enjoy it when the US stance is punish the overwhelming majority of honest people in order to catch the ones being dishonest. I'm all for catching fraudsters, tax cheats, money launderers, etc, but don't cause serious problems for innocent people in order to do it.
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Up2u
Re: Banks starting to cut services?
Since I live in Thailand, has anyone had any problems with major Thai banks regarding FATCA.? If you have please post. I have a BB account and I can do transfers via the NYC office but I find ATM's cheaper (for me) and more convenient. I would be concerned if I lost my BB option.
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Gaybutton
- Posts: 23457
- Joined: Sat Jul 31, 2010 11:21 am
- Location: Thailand
- Has thanked: 3 times
- Been thanked: 1551 times
Re: Banks starting to cut services?
It did work for me.DeE wrote:Not sure why the link above does not work.
I wish you gents would take the extra few seconds to just spell out the words rather than using abbreviations. Not everyone knows what the abbreviations mean.Up2u wrote:I would be concerned if I lost my BB option.
Re: Banks starting to cut services?
Nope. It does appear, though, that the banks are starting to have foreigners sign a form when they open up a new account (or, in my case, switching into a new CD when the old one matured) as to whether they are or are not an American citizen. If you answer "yes", then you fill out a short form with some pertinent information (name, social security number, etc.). As noted, I had a 22-month certificate of deposit (well, actually just a 22-month account) mature at SCB and, when rolling it over in September into a new 14-month time account, they asked me to fill out the paperwork noted.Up2u wrote:Since I live in Thailand, has anyone had any problems with major Thai banks regarding FATCA.?
It was easy to do and no big deal at all. Don't worry about it.
[I'd note that FATCA is typically being implemented either by a direct intergovernmental agreement between the foreign country and the US or by separate agreement between the US and various foreign banks. According to news reports, Thailand began negotiating an intergovernmental agreement with the US at the end of last year but, to my knowledge, it hasn't been concluded. I've heard that several Thai banks, however, have signed agreements with the US and that's what I think SCB did. Since the FATCA law in the US was passed many years ago, there have been some who have blared the warning of "sky-is-falling" scenarios and suggested US citizens wouldn't be able to open bank accounts, stock accounts, etc., in Thailand or elsewhere; all of that, however, as most suspected, turned out to be untrue.]
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Astro
Re: Banks starting to cut services?
This post is for Yanks only.
I have had excellent service from Capital One 360 which is the online bank formerly known as ING.
They are having a Black Friday promotion where you can earn $100 for opening either a savings or checking account.
This is a great deal.
Capital One Special Bonus Offer
This promotion ends on December 1st.
I opened my account when I was living in the States. I'm not sure if an American living in Thailand can easily open an account unless they have an American address.
Even without the bonus it's a good eal as the online savings earns 0.75% interest which is good for the States. But special Krungsri accounts in Thailand earn over 2% interest.
I have had excellent service from Capital One 360 which is the online bank formerly known as ING.
They are having a Black Friday promotion where you can earn $100 for opening either a savings or checking account.
This is a great deal.
Capital One Special Bonus Offer
This promotion ends on December 1st.
I opened my account when I was living in the States. I'm not sure if an American living in Thailand can easily open an account unless they have an American address.
Even without the bonus it's a good eal as the online savings earns 0.75% interest which is good for the States. But special Krungsri accounts in Thailand earn over 2% interest.