Enacted in 2010 by a Democrat-controlled Congress and signed into law by Barack Obama, FATCA is virtually unknown to most Americans but has been wreaking havoc with the global financial system outside the US. Touted as a weapon against ‘fat cat’ tax evaders stashing funds offshore, FATCA is instead an indiscriminate information dragnet requiring all non-US financial institutions (banks, credit unions, insurance companies, investment and pension funds, etc.) in every country in the world to report data on all specified US accounts to the IRS.

If any country refuses to comply, FATCA provides for its financial sector to be hit with crippling penalties that will tank its economy.

“FATCA,” says Green, is “an extraterritorial diktat that burdens other countries’ financial institutions and their clients, which violates other countries’ sovereignty, and which is detrimental to their consumers and taxpayers. FATCA turns law-abiding, middle-class Americans living overseas, of whom there are approximately eight million, into financial pariahs,” leading to record numbers of US citizenship renunciations.

With Obama in the White House, doing away with FATCA was virtually impossible, despite repeal bills introduced by Senator Rand Paul (R-KY) and Rep. Mark Meadows (R-NC). “FATCA is a textbook example of a bad law that doesn’t achieve its stated purpose but does manage to unleash a host of unanticipated destructive consequences,” states Sen. Paul.

But now, with Donald Trump’s election and a GOP-led Congress expected to pass a comprehensive tax reform package this year, the situation has changed.

Most importantly, the 2016 Republican Platform calls for FATCA’s repeal, denouncing the law’s “warrantless seizure of personal financial information without reasonable suspicion or probable cause” and its threat to the “ability of overseas Americans to lead normal lives.”

As his co-leader of the campaign to Repeal FATCA, Green has turned to former US diplomat and longtime Senate leadership staffer Jim Jatras of the media and government relations firm Global Strategic Communications Group (GSCG). Jatras, a leading authority on FATCA, edits the online publication www.RepealFATCA.com, which is dedicated to getting rid of what he calls “the worst law most Americans have never heard of”.

On Green’s initiative, Jatras is assembling a team of experienced DC professionals to push the repeal effort over the top (Twitter @RepealFatca). “Nigel’s deciding to step up to the plate is just tremendous,” says Jatras. “Billions of dollars have been wasted worldwide complying with FATCA, billions of words have been written complaining about it. Now it’s time for action. When that tax bill gets to President Trump’s desk, we want FATCA repeal in it.”

The post Nigel Green launches campaign to repeal Obama-era FATCA law appeared first on International Finance.

28th June 2013

American citizens living in the U.K are struggling to get financial advice as private client and wealth managers turn away clients with links to the U.S.

This is due to an impact of the implementation of Foreign Account Tax Compliance Act, known as FATCA, which seeks to prevent tax evasion by Americans who have offshore accounts. The law signed by Barack Obama in March 2010, requires financial institutions outside the U.S. to disclose the identity and activity of American clients with more than $ 50,000 in an account. The legislation is aimed at detecting US citizens who evade federal income taxes by holding investments in foreign financial institutions. However, the importance it places on many wealth managers and private banks in the UK has forced some internationally renowned banks which provide wealth management advisory services to rethink their business strategies, HSBC, Deutsche Bank, Bank of Singapore and DBS Group Holdings have all turned away businesses, to avoid scrutiny from the U.S.

The 2010 law which was to be phased from 1^st January, 2013, requires financial institutions based outside the U.S to disclose, obtain, and report information about income and interest payments accrued to the accounts of American clients. The introduction of the law would mean additional compliance costs for banks and fewer investment options and advisers for U.S. citizens living abroad, which will hamper their ability to generate maximum returns on their investments. Other advisory firms who have stopped offering services to Americans in the UK include UBS and Brewin Dolphin. HSBC, more popularly called by cyber security experts and the media as heroin smuggling bank and notorious for supporting money laundering activities has told that it is not giving any investment advisory services to U.S. clients with foreign accounts. Fear of huge penalties and criminal prosecution are haunting investment advisory firms and banks in the U.K. Dominic Gamble who helps his clients to get a wealth manager suiting to his or her businesses said a small number of private banks will work with US citizens, but they typically will not accept clients with less than an account opening size of £ 2 million.

The new law will hit hard on the Americans living in the U.K., there are 126,330 U.S. passport holders residing in England and Wales, of whom 48,062, or 38 percent live in London, as per data obtained by the Office for National Statistics.

Jason Choi, a Singapore based lawyer working for Latham and Watkins LLP says, Americans who don’t comply with FATCA are deemed “recalcitrant” and income they receive from U.S. sources are subject to a 30 percent withholding tax. To avoid the tax carnage Americans are now renouncing their citizenships with 1,780 passports being surrendered compared to 235 in 2008 as per data obtained from IRS.

However, some other banks are seeing a window of opportunity, Royal Bank of Canada, the sixth biggest wealth manager with $ 435 billion under management as on the beginning of 2011, said it sees the opportunity as competition is exiting, including in emerging markets where it is managing more than $ 80 million.

The post U.K. Wealth Managers Restrain Advice to U.S. Millionaires as Tax Evasion Rule Looms appeared first on International Finance.