European banks do not want American clients | FATCA

On this blog I pay attention to the European ‘Accidental Americans’, people who did not ask to become a ‘US person’, but who e.g. accidentally have been born in the US and returned after a few years to Europe and only after FATCA found out they are US person (more information in Dutch). Not only they are in great trouble with banks and governments.

The same applies to the ‘real’ Americans, people who have grown up in the US and have come to Europe later in their life. Many of them have major problems with financial institutions in Europe. The most important reason: European financial institutions have to provide unpaid services to the US tax authority (IRS) and they consider that to be too expensive. Another reason is that sometimes US law applies to services provided to US persons, something that does not make the financial institutions happy either.

The articles on this subject show that the problems are increasing. One of the articles describes the position of European financial institutions of which “very few have the type of compliance department that can handle complex U.S. regulations and heightened scrutiny“.

These American expats often are not in the position to give up their American nationality. One of my US-expat readers wrote:

I would never want anyone to actively be forced or coerced to relinquish citizenship or denounce their heritage. I think the problem comes as US Laws treat people as foreign assets across the board and the EU, as many areas, have effectively recognized/accepted that.The explosion and acceptance of “extraterritorial laws” has seriously damaged human rights and effectively designates human beings as “property” in specified circumstances whereby more countries are more and more treating their subjects as the US does. Where extraterritorial laws conflict for a certain person or entity, as with FATCA, the results are disasterous. Most countries limit the application of their laws to six months residency in a foreign state, but exceptions exist for every country. For example, in the Netherlands, sanctions are maintained that do not expire even when tax residency does. Pretty much all countries are now ramping up this inhumane treatment of people under the keyword “Compliance.” To me, “Compliance” has become a dirty word and a cottage industry and pretty much all countries are guilty for not having recognized this. Solving FATCA alone will not solve this but will probably make a difference that the trend starts to move in the other direction.

It shows the importance of financial human rights.


Some of the articles on the problems of US expats

Why US Brokerage Accounts of American Expats are Being Closed, Thun, 2020:

Americans abroad are being informed by U.S. banks and brokerage firms with increasing frequency that their accounts have been restricted or even closed due to their status as non-U.S. residents. (…) This follows on the heels of widespread action by non-U.S. financial institutions to revoke and refuse services to expat Americans as a result of the Foreign Account Tax Compliance Act (FATCA).

First It Was FATCA, Now MiFID II Has U.S. Investors in Europe Facing Night-mares, Blooomberg, 7 November 2019:

The last several years have been challenging for overseas Americans to open or maintain financial accounts in the U.S. and in their country of residence. For a variety of compliance and legal reasons, many U.S. banks and brokerage firms have been asking their long-standing overseas American clients to close their accounts. At the same time, due to Foreign Account Tax Compliance Act (FATCA) compliance issues, many non-U.S. financial institutions have made it difficult or impossible for overseas Americans to work with them.

The Tax Implications of Opening a Foreign Bank Account, Investopedia, 11 August 2019:

And frankly, most foreign banks nowadays do not want deposits from U.S. citizens, either—not even those in the traditional destinations, such as Switzerland and the United Kingdom. Their reluctance is due to the increased aggressiveness from the IRS and the Department of Justice (DOJ). Foreign banks are only willing to devote so much time and energy to courting American clients, and very few have the type of compliance department that can handle complex U.S. regulations and heightened scrutiny.

‘US person’ status: financial restrictions for American expatriates in France, March 2019:

When you are an American citizen and you plan to become a resident of France, you should be aware that having the status of a “US person” can sometimes lead to unexpected consequences for your personal finances in France, particularly concerning whether (or not!) you will be able to open a bank account. It’s better to first prepare yourself to avoid some headaches and frustration …

FATCA for US Expats – The Ultimate Guide, 2019:

For foreign banks, the cost of FATCA compliance has been huge, according to some estimates costing more money globally than the IRS has recouped in new tax revenue. Many foreign banks have in fact taken the view that the cost of FATCA compliance isn’t worth having US clients for, leading them to turn Americans away or close existing clients’ accounts. This in turn has left some American expats unable to access banking or credit services in the country where they live.

Access to Banking and Financial Services, October 2017, by the Association of Americans Resident Overseas, describes the problems of expats.

New Banking Services Available for US Expats Suffering Due to FATCA, Bright Tax, August 2016:

Since the Foreign Account Tax Compliance Act (FATCA) began compelling foreign banks to report their American account holders or face significant penalties if they trade in the US (which nearly all do), the extra paperwork that the reporting entails has led many foreign banks to refuse to provide services to US citizens.
This has left tens of thousands of Americans living abroad in a very difficult situation, unable to open a bank account, having existing bank accounts closed, or unable to obtain credit or a mortgage.


All posts on this blog on: FATCA, financial human rights.


Addition 1o November 2020
Read the tweets of a woman living in Sweden who is denied access to the financial system:


Addition 10 November 2020
In Bitcoinmagazine the article Binance weert Amerikaanse klanten, nog 90 dagen om Bitcoin op te nemen was published. The reason why Binance has a separate portal for the US is probably also caused by applicability of complicated US legislation on Binance’s activities.

Is the future that people from the US and US Persons living elsewhere can not buy products or obtain services from providers outside the US?

Over Ellen Timmer

Weblog: ||| Microblog: ||| Motto: goede bedoelingen rechtvaardigen geen slechte regels
Dit bericht werd geplaatst in Belastingrecht, Financieel recht, onder meer Wft, Wtt en getagged met , , , , . Maak dit favoriet permalink.

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