Three-Quarters Of Americans Abroad Want To Take This “Alarming” Action

The exodus from the United States (US) has not let up, and is only picking up steam as the US economy faces further financial and economic turbulence.

Although an “end to quantitative easing” was announced yesterday, a large share of investors are not confident in US prospects and US citizens at home and abroad are even less confident of being owned by the rapacious US government. 

This is demonstrated in a new survey  by deVere Group, an independent financial advisory organization, showing 73% of Americans abroad have thought about turning in their US passports and renouncing.

With an estimated 7.6 million Americans overseas, that means about 5.5 million Americans have pondered relinquishing their passport. Holding a US passport has become a liability mainly because the US taxes its citizens, including permanent non-residents, on their worldwide income. It is one of the few countries which does so. 

Forbes writes,

If all those considering renouncing followed through, it would be the biggest spike ever in renunciations. Already, Federal Register data reveals renunciations spiked by 39% shortly after FATCA–the Foreign Account Tax Compliance Act–came into effect. FATCA is the culprit, says the survey, which is based on 400 expatriates.

16% of respondents indicated they would not consider it, while 11% did not know. Nigel Green, founder and chief executive of deVere Group, said: “It is alarming that nearly three quarters of Americans abroad said that they are going to or have thought about giving up their U.S. citizenship.”

FATCA is blamed for the increased expatriations. FATCA was enacted in 2010, and after a four-year long implementation, is essentially in full-swing globally with reporting requirements for foreign banks and fines coming down from the US government.

FATCA’s requirement for banks abroad to report on Americans with accounts of over $50,000 forces banks to spend more money or close accounts with Americans. Many are closing accounts of Americans abroad, creating huge problems for those still carrying an American passport.  

Record-breaking fines will rain down in the wake of FATCA. recedent for fining banks was set when the IRS fined UBS for $780 million in penalties and American names. After that Credit Suisse accepted a guilty plea and paid $2.6 billion fine. More than 100 other Swiss banks have settled. So why bother? 

Meanwhile, the number of Americans expatriating continues to climb, as there are 776 names on the Treasury Department list for the third quarter of 2014, marking the third highest quarterly figure in history. This is a 39% increase in the three months through September. 2,533 individuals have renounced in 2014. 2014 will likely break 2013’s all-time expatriation record of 2,999.

As Bloomberg writes,

The U.S., the only Organization for Economic Cooperation and Development nation that taxes citizens wherever they reside, stepped up the search for tax dodgers after UBS AG (UBSN) paid a $780 million penalty in 2009 and handed over data on about 4,700 accounts. Shunned by Swiss and German banks and with Fatca starting, more than 9,000 Americans living overseas gave up their passports over the past five years.

Standard Chartered Closing Accounts

Banks will continue to close down the accounts of Americans. 

Standard Chartered notified thousands of UAE small and medium enterprise customers it is closing their accounts this month. Pressure from US regulators finally got to the bank as it realized it was facing, at least, millions of dollars in compliances costs. 

“We regret to notify you that Standard Chartered Bank will no longer be able to provide banking services to you, and your account(s) will be closed 30 days from the date of this letter,” the London-listed bank wrote in a letter to customers dated Oct. 9.

Reuters, which saw the letter, claims customers are angry, saying they have not been given enough time to properly close their accounts.

The bank has already had a taste of US regulatory fines as the New York State Department of Financial Services, which proposed a BitLicense for Bitcoin this year, fined the bank $300 million. Between 1,400 and 8,000 accounts are expected to be affected by the US settlement.

As you can see, US regulators and the bank have put the livelihoods of many at risk. The accounts affects are between $1 million and $35 million so its not merely a matter of taking a cashier’s cheque.

Worldwide FATCA

Big steps are being taken globally to ensure that government’s get their taxes, and it’s all been inspired by FATCA. These new steps include a new OECD/G20 standard  on automatic information exchange between the nations, including major financial centers.

All-in-all this means fifty-one jurisdictions have committed to automatically exchanging information.  The first information exchanges by early adopters are set to be deployed by September 2017.

Fifty-one jurisdictions, many represented at Ministerial level, translated their commitments into action during a massive signing of a Multilateral Competent Authority Agreement that will activate automatic exchange of information, based on the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Early adopters who signed the agreement have pledged to work towards launching their first information exchanges by September 2017. Others are expected to follow in 2018.

“We are making concrete progress toward the G20 objective of winning the fight against tax evasion,” OECD Secretary-General Angel Gurria said. “The fact that so many jurisdictions have agreed today to automatically exchange financial account information shows the significant change that can occur when the international community works together in a focused and ambitious manner.

The world is quickly becoming a smaller place for tax cheats, and we are determined to ensure that developing countries also reap the benefits of greater financial sector transparency.” 

Internationalization is The Key

These are all reasons to think big. The world is your playground as an investor. So have some fun. There are ways in which you can diversify your assets and spread your risk around, and its all legal, which of course is what is most important. 

Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.