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https://www.americansabroad.org/banking/

Cross-Border Banking, Finances and Credit

The enactment of recent tax evasion legislation; the FATCA legislation, the increased enforcement of FBAR, the Patriot Act, and foreign government tax legislation such as the European Alternative Investment Fund Managers Directive (AIFMD), has in some cases, resulted in the denial and/or closure of both retail and investment financial accounts for Americans resident overseas.

Executive summary

Some Foreign Financial Institution (FFIs), as a reaction to FATCA and FBAR compliance (given fear of penalty application) are denying and closing accounts for US citizen clients. The Patriot Act, which recommends application of stricter guidance for banks “Know Your Client” requirements, is also having an effect on US citizen’s ability to maintain financial accounts State-side when they are no longer resident in the United States. Foreign legislation such as the European, Alternative Investment Fund Managers Directive (AIFMD), which does not allow some US mutual funds (IRAs) to be sold or managed for US clients resident outside the United States, is also complicating the situation.

ACA, Inc. advocates a Same Country Exception to alleviate the problem of “lock-out” whereby some Foreign Financial Institutions (FFIs) refuse to do business with Americans because of FATCA reporting. Same Country Exception would exclude the reporting of accounts owned by Americans abroad where the account is with a Foreign Financial Institution in the same country where the individual is a bona-fide resident. This would alleviate the filing burden for FATCA on Americans as well as, the identification and disclosure of these accounts by the Foreign Financial Institution.

US citizens with foreign bank accounts have two financial account tax filing requirements, IRS Form 8938 (instituted by the FATCA legislation) and Treasury Department Form FINCen-114, the Foreign Bank Account Report, commonly called the FBAR. ACA advocates for the simplification of the reporting; reducing as much as possible the burden of double reporting of information in order to achieve legislative goals.

ACA, Inc. also advocates for easing Patriot Act guidance to facilitate State-side banking access for Americans abroad. Americans living abroad still need to maintain financial investments, property and an active credit records in the United States for many reasons including, the cashing of Social Security check, repatriation and retirement.