Swiss Bank Accounts

[ChiliPepr]

Quote:

Originally Posted by meierlde It is rather what the US can do to the bank, i.e. cut it off from access to the US banking system, and thereby effectively kill it. This means that they would for example not be able to send or receive wire transfers from a US bank.

+1

as a us citizen you will find it harder and harder to open financial accounts outside the US. This is also causing people that have been living outside the US for most/all their lives with dual citizenship to give up their US citizenship.

[Texas Proud]

Quote:

Originally Posted by meierlde It is rather what the US can do to the bank, i.e. cut it off from access to the US banking system, and thereby effectively kill it. This means that they would for example not be able to send or receive wire transfers from a US bank.

If it is a small local bank, does that matter


But then maybe there are no small local banks in Switzerland....


So, if there are not any.... then all of the banks are big and will likely have a system in place to handle US citizens.... so I still do not get the problem of not accepting new accounts....

[theOAP]

Quote:

Originally Posted by Texas Proud If it is a small local bank, does that matter .

Yes, it does matter.

When a bank signs an agreement with the US Treasury (either independently or thru an IGA with the country the bank is in), it agrees to withhold 30% of any pass-thru payment to any 2nd bank if that 2nd bank has not signed a FATCA agreement with the US.

If UBS has signed an agreement, any other Swiss bank (a small Swiss cantonal bank for example) that has a transaction with UBS must also have a FATCA agreement, or else UBS must withhold 30% of the transaction for the IRS.

[theOAP]

Sorry, I didn't finish the previous post.

Some country IGA's do allow for pass-thru payments to occur without the 30% withholding clause. It all depends on the IGA, or the FATCA agreement with the bank sending the transaction.

[haha]

Quote:

Originally Posted by galeno USAmericans don't understand the level of control the USA has over the rest of the world. E.g. USA treaties and financial regulations makes getting and keeping a local bank account for a CITIZEN of my country very difficult. To comply with USA anti-money laundering regulations, my wife and I have to have a CPA certify our financial life every year so we can use our bank accounts.

I think many members here have an understanding of your particular situation, but I do not. Probably a random citizen of Costa Rica or any other country is able to open an account in that country, if there is no US connection either of the citizen or his/her spouse. So are you an American citizen, or an America/Costa Rican dual citizen? Does this explain your report?

Ha

[tulak]

When you open an account outside of the US, is the bank required to ask you if you're a US citizen?

I'm wondering if you are a dual citizen, why not open an account using the non-US citizenship. At that point, the local bank shouldn't know if you hold another citizenship, unless they are required to ask.

[theOAP]

We've picked an interesting day to hold this discussion since today (09 Dec. 2013) is the day all Swiss banks must file a first stage delaration with the US DoJ (Department of Justice).

Swiss-US tax evasion deal could "kill" smaller Swiss banks. - swissinfo.ch

From the above article:
Swiss banks that are not already under active DoJ investigation could avoid criminal prosecution by applying for a so-called “non-target” letter by the end of the year under the terms of the Swiss-US deal.

But they could still be liable for huge civil penalties depending on when they opened accounts for US clients containing non-declared assets.

Accounts already in existence before August 1, 2008, would attract a fine of 20% of accumulated assets.

A 30% fine would apply to accounts opened between August 1, 2008, and February 28, 2009.

This levy would increase to 50% of accumulated assets of any undeclared account opened after February 28, 2009.

Note that all Swiss banks are considered by the DoJ to have encouraged tax evasion, and it is up to each bank to prove otherwise.

One of the larger Swiss banks have requested any client who is a US Person to submit their US tax return for verification indicating they have declared any account held by that bank on the return. The tax return must have been prepared by a certified Swiss (or multi-national) CPA firm. Many Americans abroad do not wish to employ expensive accountants, and may use TurboTax or they may have prepared their returns in the old fashioned pencil and paper method themselves (it is doable, with a fair amount of research) and therefore do not meet the criteria. In this case, the bank has no way of knowing if the return shown is accurate or the account has indeed been declared.

As can be seen from the quote above, the penalties are severe if one account is discovered to have not been declared.

Also in the article is a side box indicating the 4 groups used to determine the banks position as regards it's US Person clients for the DoJ response. Since the banks can not verify 100% compliance as mentioned above of any and all US Persons on their books, most are opting for category 2 even though they never encouraged tax evasion.

As a result, the best option appears to the banks to be one where all accounts are purged of any US Person (a costly seek and identify operation). Hence, it's preferable to have no US Persons on their books.

This may answer the question posed by kiki. "I'm wondering if you are a dual citizen, why not open an account using the non-US citizenship. At that point, the local bank shouldn't know if you hold another citizenship"... Quite simply, the banks can not afford to get it wrong. And if discovered, nor could the US Person. Failure to answer the question correctly "are you a US Person?" (which all banks will now ask when opening a new account) can be interpreted as wilfully evading a US tax obligation, and the penalty for that is severe.

[traineeinvestor]

Quote:

Originally Posted by theOAP Yes, it does matter. When a bank signs an agreement with the US Treasury (either independently or thru an IGA with the country the bank is in), it agrees to withhold 30% of any pass-thru payment to any 2nd bank if that 2nd bank has not signed a FATCA agreement with the US. If UBS has signed an agreement, any other Swiss bank (a small Swiss cantonal bank for example) that has a transaction with UBS must also have a FATCA agreement, or else UBS must withhold 30% of the transaction for the IRS.

+1

Another major issue is that FATCA places the onus on banks to proove that their customers are not US persons (which is obviously ridiculous).

[FIREd]

Quote:

Originally Posted by kiki When you open an account outside of the US, is the bank required to ask you if you're a US citizen? I'm wondering if you are a dual citizen, why not open an account using the non-US citizenship. At that point, the local bank shouldn't know if you hold another citizenship, unless they are required to ask.

I have heard stories of dual Swiss-US citizens who have to hop from bank to bank because -somehow- their bank always end up finding out about their undisclosed US citizenship and close their account. So there must be a database somewhere flagging dual citizens.

[galeno]

I'm talking about random Costa Rican citizens' accounts in Costa Rican banks. All my USAmerican friends' CR bank accounts have been cancelled or closed down. These friends are long term legal residents of Costa Rica.

No Costa Rican bank or financial institution will accept USAmericans as clients.

Every year a Costa Rican must present either a payroll report if an employee or a financial report from a CPA if a professional or a business person.

These Costa Rican laws and regulations were shoved down our throats by the USA.

Quote:

Originally Posted by haha I think many members here have an understanding of your particular situation, but I do not. Probably a random citizen of Costa Rica or any other country is able to open an account in that country, if there is no US connection either of the citizen or his/her spouse. So are you an American citizen, or an America/Costa Rican dual citizen? Does this explain your report? Ha

[galeno]

A Costa Rican bank or financial institution is not required to ask about USA citizenship or legal residency but every single one of them will.

If you are a "USA person" you will be informed that you cannot open an account. If you lie and they catch you later you will get a letter giving you X days to close your account or you will lose your money.

[galeno]

Exactly! The onus is on the bank.

Quote:

Originally Posted by traineeinvestor +1 Another major issue is that FATCA places the onus on banks to proove that their customers are not US persons (which is obviously ridiculous).

[traineeinvestor]

Quote:

Originally Posted by kiki When you open an account outside of the US, is the bank required to ask you if you're a US citizen? I'm wondering if you are a dual citizen, why not open an account using the non-US citizenship. At that point, the local bank shouldn't know if you hold another citizenship, unless they are required to ask.

All banks (in my experience) will ask for a declaration that you are not a "US person" (a broader term than "US citizen") - they have to in order to protect themselves. The fact that you may also be a citizen of another country is irelevant.

[landover]

Quote:

Originally Posted by traineeinvestor All banks (in my experience) will ask for a declaration that you are not a "US person" (a broader term than "US citizen") - they have to in order to protect themselves. The fact that you may also be a citizen of another country is irelevant.

I was recently looking in some securities offering documents, they explicitly stated that if you are a US person, no need to read further, you are not allowed to invest.

[Meadbh]

Some years ago I began investing with the wealth management division of a Canadian bank. Part of my investment came from a US trust fund that I had inherited. Not only did I have to submit a bunch of documentation to the US firm before accessing my money, I had to sign a document at my Canadian bank entitling the US government to check me out and verifying that I was not money-laundering. I am not a US citizen. This was something the Canadian bank was apparently obliged to do by the US government in order to conduct business in US securities. I felt insulted but there was nothing to do but suck it up.