(Corrects fine to Credit Suisse to $2.5 billion from $1.2
billion, 9th paragraph)
By Geoff Williams
June 11 Imagine being excluded from the
financial services industry because of your passport.
That happened to Carrie Walczak, an American living in
Germany, in May. She received a letter from Deutsche Bank
informing her that her bank account was going to be
closed because she is an American.
Walczak, a 37-year-old from upstate New York, lived in
Brussels for seven years with her Belgian husband before moving
to Bad Homburg, Germany, where she has resided for the past 18
months. Walczak says the letter informed her of new tax
regulations required by the U.S. government, and because of that
she is being dropped as a customer.
She says that a second bank account, from a financial
institution based in Brussels, remains open -- but only because
she signed two documents allowing the bank to disclose all of
her banking information to the IRS. She has a third bank, based
in Germany, which hasn't sent any letters to her.
"So that seems safe for now," Walczak says, admitting that
she is rattled. "The problem is that to get paid and to have a
normal life, one does need a bank account. If eventually other
or all banks follow Deutsche Bank's lead, it could make my life
Not to mention for all American expats, who number between 5
million and 6 million. In 2010, the Foreign Account Tax
Compliance Act (FATCA) became law in the United States, making
it harder for American taxpayers to hide assets.
Foreign banks and other financial institutions are required
to give information to the Internal Revenue Service about
Americans' accounts worth more than $50,000. There is a slight
reprieve - in 2014 and 2015 the law is in a "transitional
period," with the IRS not taking punitive measures if a bank
appears to be making a good-faith effort to comply.
Many of the account-closing complaints are coming from
Americans living in Switzerland, according to David McKeegan,
co-founder of Greenback Expat Tax Services, headquartered in
That is due to Switzerland's banking troubles in recent
years. In 2009, UBS paid a $780 million fine to the IRS for
helping American taxpayers hide money abroad. In May, Credit
Suisse was fined $2.5 billion for similar charges.
Neither firm made executives available for comment.
Still, it can be tough to keep a bank account if you're an
American living in any country. "We're even hearing of some
American banks closing accounts of Americans because they live
overseas," McKeegan says.
If you're an American expat and you have a bank account or
have recently moved and need to get one, Michele Moore Duhen
advises patience. Duhen relocated from Boston to London in
April. She was able to open a bank account at Barclays, but it
took some effort.
"My passport wasn't enough. They wanted bills proving I
lived where my flat contract stated I lived. But you can't set
up for bills until you have a bank card," Duhen says.
It took her about 10 days and several back and forth trips
to the bank with various pieces of paperwork before she and her
husband, a French citizen, could get accounts.
Don't assume that if a bank shuts your account you do not
have other options in the same country. Darryl Daugherty, a due
diligence specialist from Baltimore, says fellow Americans are
having trouble opening accounts in Bangkok, where he has lived
for 13 years.
"It's not yet insurmountable," Daugherty says - you just
have to keep checking around for friendlier banks, he adds.
RENOUNCE YOUR CITIZENSHIP
Renouncing U.S. citizenship is a drastic measure -- and
surely an unintended consequence of FATCA. But McKeegan says he
has seen American taxpayers doing that.
"It's not just the super rich doing it," McKeegan says.
"We're talking average, middle-class people, people teaching
English as a second language and doing freelance jobs making
$30,000 to $50,000 a year, simply because of the fact that they
can't open locked bank accounts."
Last year, nearly 3,000 Americans -- a record -- renounced
their citizenship or residency, according to the IRS. In the
first quarter of 2014, another 1,000 people have followed suit.
(Follow us @ReutersMoney or here
Editing by Lauren Young and Leslie Adler)