It's Official - America Now Enforces Capital Controls

[colibra2]

"It couldn't have happened to a nicer country. On March 18, with very little pomp and circumstance, president Obama passed the most recent stimulus act, the $17.5 billion Hiring Incentives to Restore Employment Act (H.R. 2487), brilliantly goalseeked by the administration's millionaire cronies to abbreviate as HIRE. As it was merely the latest in an endless stream of acts destined to expand the government payroll to infinity, nobody cared about it, or actually read it. Because if anyone had read it, the act would have been known as the Capital Controls Act, as one of the lesser, but infinitely more important provisions on page 27, known as Offset Provisions - Subtitle A—Foreign Account Tax Compliance, institutes just that. In brief, the Provision requires that foreign banks not only withhold 30% of all outgoing capital flows (likely remitting the collection promptly back to the US Treasury) but also disclose the full details of non-exempt account-holders to the US and the IRS. And should this provision be deemed illegal by a given foreign nation's domestic laws (think Switzerland), well the foreign financial institution is required to close the account. It's the law. If you thought you could move your capital to the non-sequestration safety of non-US financial institutions, sorry you lose - the law now says so. Capital Controls are now here and are now fully enforced by the law. "

article from zerohedge. Tried posting a link to no avail

What next. This could create some serious problems if we have to give up 30% of money over $10,000 that we transfer into Thailand. Any thoughts or have you heard about this.

Edited March 29, 2010 by colibra2

[chiang mai]

I'm trying to understand your concerns on this issue, presumably you are coming at it from the perspective of an American citizen who has transferred funds from a US based US bank to a US based based foreign bank, if so, why would you do that and what did you think you might gain from that move? Presumably you were trying to avoid a US Fed reporting scenario and that avenue is now closed? Those things being true it seems that the new act simply puts the US based foreign banks on a similar footing as domestic banks, from a Fed control standpoint.

The solution to any problem caused by this would seem to be either change to a US based bank and/or transfer funds in less than USD 10k chunks more frequently. All of the above assumes however that any money involved is "clean and above board" and the account holder is not trying to avoid something, whatever that might be!

Edited March 29, 2010 by chiang mai

[Jingthing]

This is troubling news to those of us who transfer in money from the US to Thai banks to qualify for Thai visas. Anyone knowledgeable who can confirm and explain the implications of this, please do so.

[chiang mai]

What percentage of Americans would you imagine use foreign banks in the US for their US based domestic accounts?

[Jingthing]

What percentage of Americans would you imagine use foreign banks in the US for their US based domestic accounts?

Not many. Where is it written that the banks under the regulation only includes foreign banks in the US? I am really confused about this. I didn't see that language. I only see foreign banks.

[chiang mai]

What percentage of Americans would you imagine use foreign banks in the US for their US based domestic accounts?

Not many. Where is it written that the banks under the regulation only includes foreign banks in the US? I am really confused about this. I didn't see that language. I only see foreign banks.

"the Provision requires that foreign banks not only withhold 30% of all outgoing capital flows". My read on this is that it's talking about US based foreign banks, despite it's wishes otherwise the US government can't mandate such things on foreign based foreign banks globally.

Edited March 29, 2010 by chiang mai

[Jingthing]

Yes, foreign banks. What are you on about? Where does it say foreign banks ONLY located in the US. My reading says that foreign banks means foreign banks, that the US is mandating foreign banks globally to do this work for them. Where does it say that isn't the case?

[chiang mai]

Yes, foreign banks. What are you on about? Where does it say foreign banks ONLY located in the US. My reading says that foreign banks means foreign banks, that the US is mandating foreign banks globally to do this work for them. Where does it say that isn't the case?

Jingthing, do you really believe that the US government can pass legislation requiring every bank on the planet to follow its instructions, come on now! BTW, the article also refers to "outgoing capital" which clearly means US based banks.

Edited March 29, 2010 by chiang mai

[samuibeachcomber]

as govts. around the world become more intrusive into the lives of its citizens anything is possible even when you think you are relatively safe with retirement pension and funds secure back home.Our money is never safe from govt. control.I live each day here in thailand as though it could be my last,by that i mean i enjoy each day and make the most of it.

[Jingthing]

Yes, foreign banks. What are you on about? Where does it say foreign banks ONLY located in the US. My reading says that foreign banks means foreign banks, that the US is mandating foreign banks globally to do this work for them. Where does it say that isn't the case?

Jingthing, do you really believe that the US government can pass legislation requiring every bank on the planet to follow its instructions, come on now!

Yes, I think they can do that. I am surprised you think otherwise. Americans are very arrogant. The foreign banks can choose to comply or not, and if not, they will close the accounts. You are talking from hope and assumption. I want facts! Edited March 29, 2010 by Jingthing

[chiang mai]

Yes, foreign banks. What are you on about? Where does it say foreign banks ONLY located in the US. My reading says that foreign banks means foreign banks, that the US is mandating foreign banks globally to do this work for them. Where does it say that isn't the case?

Jingthing, do you really believe that the US government can pass legislation requiring every bank on the planet to follow its instructions, come on now!

Yes, I think they can do that. I am surprised you think otherwise. Americans are very arrogant. The foreign banks can choose to comply or not, and if not, they will close the accounts. You are talking from hope and assumption. I want facts!

If you truly believe that then arrogant is just the tip of the iceberg, closely followed by wishful thinking!

[Jingthing]

This is getting ridiculous. I welcome someone with actual KNOWLEDGE about what this news specifically means to post here. Not interested in theories and speculation.

[Jingthing]

Yes, foreign banks. What are you on about? Where does it say foreign banks ONLY located in the US. My reading says that foreign banks means foreign banks, that the US is mandating foreign banks globally to do this work for them. Where does it say that isn't the case?

Jingthing, do you really believe that the US government can pass legislation requiring every bank on the planet to follow its instructions, come on now! BTW, the article also refers to "outgoing capital" which clearly means US based banks.

I see nothing of the kind! Outgoing capital could easily mean SWIFT transfers from a US bank account to any foreign bank account. That is the most common kind of outgoing capital, I would assume. Do you actually know what you are talking about here?

[lannarebirth]

Yes, foreign banks. What are you on about? Where does it say foreign banks ONLY located in the US. My reading says that foreign banks means foreign banks, that the US is mandating foreign banks globally to do this work for them. Where does it say that isn't the case?

Jingthing, do you really believe that the US government can pass legislation requiring every bank on the planet to follow its instructions, come on now!

Yes, I think they can do that. I am surprised you think otherwise. Americans are very arrogant. The foreign banks can choose to comply or not, and if not, they will close the accounts. You are talking from hope and assumption. I want facts!

If you truly believe that then arrogant is just the tip of the iceberg, closely followed by wishful thinking!

What was clear when the major Swiss banks pushed into American finance sector is that foreign banks that also have US chartered banks WILL be made to comply with US regulations. The handwriting has been on the wall for a long time. It will be interesting to see how far they can push for compliance amongst banks which do not have US chartered branches or affiliates.

[Jingthing]

So you are saying this only applies to Thai banks with US affiliates? That sounds hard to fathom. Couldn't US based based banks simply refuse to do SWIFT transfers to Thai banks that are not complying? Or worse, as the text implies, the Thai banks could simply refuse to do business with Americans. If this is what it sounds like, I guess that means we have to keep SWIFT transfers under 10K USD. What about people buying 10 million baht condos?

To be clear, I don't understand this news. As I read it, it sounds very bad for many Americans in Thailand. Hopefully, an informed poster can clarify exactly what it means.

Edited March 29, 2010 by Jingthing

[Tywais]

Lot of forums talking about it now. Here are a few non-forum links.

http://www.zerohedge.com/article/its-offic...apital-controls

http://www.istockanalyst.com/article/viewa...ticleid/3982193

[lannarebirth]

So you are saying this only applies to Thai banks with US affiliates? That sounds hard to fathom. Couldn't US based based banks simply refuse to do SWIFT transfers to Thai banks that are not complying? Or worse, as the text implies, the Thai banks could simply refuse to do business with Americans. If this is what it sounds like, I guess that means we have to keep SWIFT transfers under 10K USD. What about people buying 10 million baht condos?

To be clear, I don't understand this news. As I read it, it sounds very bad for many Americans in Thailand. Hopefully, an informed poster can clarify exactly what it means.

No, I'm not saying that. I'm not aware of this legislation till just now and know no more about it than you do. What I'm saying is that the rapacious revenue collectors in the US government used the fact that US chartered banks would be subject to compliance with regard to divulging information about US citizens holding accounts in foreign branches thay may have.

[briley]

As a Brit I have noticed the effect of your Governments act.

UK banks now ask if you are a US resident/citizen or something and if you are they either insist on extra information and documents or some banks say you can not have an account.

[WarpSpeed]

Yes, foreign banks. What are you on about? Where does it say foreign banks ONLY located in the US. My reading says that foreign banks means foreign banks, that the US is mandating foreign banks globally to do this work for them. Where does it say that isn't the case?

Jingthing, do you really believe that the US government can pass legislation requiring every bank on the planet to follow its instructions, come on now! BTW, the article also refers to "outgoing capital" which clearly means US based banks.

It clearly States that Foreign banks (think Switzerland not Swiss banks in the US) would have to comply or else close the associated accounts due to the laws in those countries, sounds like U.S. manipulation and enforcement to me..

[gregb]

So you are telling me there is worse legislation than the dreaded health care bill that I am going to have to parse through and try and understand? I have to work you know. I don't have time to keep up with all of this punitive legislation these congressional criminals are passing.

From my really, really preliminary scans of this legislation I have to agree with Jingthing. This appears to apply to all outgoing SWIFT transfers, independent of the issuing bank. As long as a foreign bank in involved, you get caught. The US government may not be able to force a foreign bank to comply, but they can cut them off from doing any USD transactions via a US network if they don't, and they could further require intermediary banks to close any accounts of non complying institutions. The only way to send money out of the country in that case would be via a bank that did comply. So anyway you look at it they accomplish their mission.

How far do you think any foreign bank would get if they could not process any transactions in US funds? I'm sure there are some banks in Iran and North Korea that might not have an issue with this, but you wouldn't be able to send SWIFT transfers to them anyway. This is serious. I know there are some bankers on this forum. I've mercilessly teased them about it before. If you have experience in the industry and can understand the jargon now would be a good time to help out. Can you take a look at this legislation and tell us what it actually means?

How long do we have before these provisions take effect?

I am going to keep researching and see what I can dig up.

[chiang mai]

Yes, foreign banks. What are you on about? Where does it say foreign banks ONLY located in the US. My reading says that foreign banks means foreign banks, that the US is mandating foreign banks globally to do this work for them. Where does it say that isn't the case?

Jingthing, do you really believe that the US government can pass legislation requiring every bank on the planet to follow its instructions, come on now! BTW, the article also refers to "outgoing capital" which clearly means US based banks.

It clearly States that Foreign banks (think Switzerland not Swiss banks in the US) would have to comply or else close the associated accounts due to the laws in those countries, sounds like U.S. manipulation and enforcement to me..

Using that same logic, any bank in the world that doesn't have a presence in the US but houses the account of an American citizen would be required to deduct 30% from any funds transfer or close the account, forget Switzerland and think China and African countries for example - why would they have to, why should they? I just don't think that people have thought this one through at all.

[Shah Jahan]

would this effect the Bangkok Bank NYC setup (ie.. Direct deposit in Dollars to their NYC branch and it shows up in THB in LOS)

[elcent]

Now I understand why the USA is considered the first beast in revelation.

[gregb]

Took me a while to even find a reliable location to download the full text. Finally did. Here is what we've got folks:

Section 1471

In the case of any withholdable payment

to a foreign financial institution which does not meet the requirements

of subsection ( b ), the withholding agent with respect to

such payment shall deduct and withhold from such payment a

tax equal to 30 percent of the amount of such payment.

This means that any US bank initiating a SWIFT transaction will be required to withhold 30% of the money unless the receiving bank complies with the US law.

In order to not have the 30% withheld, the receiving bank must supply the US government with the following information:

A. Report the data on ALL US individuals accounts held at that bank

B. Comply with all verification schemes as determined by the US government

C. Report on an annual basis the maximum value of above accounts

D. (THis is really nasty)

Deduct the 30% from any intermediary account where the foreign entity is a bank not in compliance.

E. Comply with all future requests of the US government

F. Obtain waivers from the account holders if the local law does not allow this reporting

What happens if you can not or will not supply the information asked for by the US government to your foreign bank?

Then you are deemed a "recalcitrant" account holder. The bank must return 30% of all your incoming transaction to the US government, or else lose their preferred status so that ALL their account holders will suffer, even non US citizens.

Here's the kicker, if you are not a US citizen but can not prove your identity? The bank withholds your money too.

What does the US government want to know:

(To be reported annually for all US account holders)

Name of account holder

Address of account holder

SSN or TIN of account holder

Account number

Account balance

Gross receipts and Gross withdrawls to/from said account

Section 1471(d)(1)( B ) is interesting. It says:

( B ) EXCEPTION FOR CERTAIN ACCOUNTS HELD BY INDIVIDUALS.

Unless the foreign financial institution elects to not have this subparagraph apply, such term [uNITED STATES ACCOUNT] shall not include any depository account maintained by such financial institution if

(i) each holder of such account is a natural person,

and

(ii) with respect to each holder of such account, the aggregate value of all depository accounts held (in whole or in part) by such holder and maintained by the same financial institution which maintains such account does not exceed $50,000.

To the extent provided by the Secretary, financial institutions which are members of the same expanded affiliated group shall be treated for purposes of clause (ii) as a single financial institution.

So this is basically what we have. Any bank, any where in the world, is required to adhere to this law. If they don't, all USD transactions to any account at their bank will suffer a 30% penalty.

All banks everywhere in the world will be required to track who are US entities and who are not. Any US entity that has an aggregate value over $50,000 USD in their bank at any point during the year will need to be reported to the US government. The said information stated above.

Note: There is nothing that prohibits banks from reporting ALL account holders who are US entities. Only that they are not required to if your balance during the year never exceeds $50,000 USD.

Also, if you are a corporation, and you have US shareholders that own more than 10% of your stock or reveive more than 10% of your dividends, you MUST report this along with your shareholders SSN's to the bank so they can be reported to the US government. That comes from section 1473(2)(A)

There is no date on the nastiness in section 1471, which would appear to mean that it is effective immediately. My reading says that any USD transfer you do or any USD check you deposit starting from right now on could endure a penalty of 30%. You might get a nasty surprise with no warning. Unless your bank in Thailand has asked for your SSN and you have given it to them, it is guaranteed they are not in compliance, which means the US sending institution can, at any time, start deducting 30% when they send the funds to your non complying foreign bank.

In practice I think they will give banks some time to come into compliance, but expect this to come to a head REAL SOON!

I hate my government with a passion that I can not express in words.

P.S.

Forgot to warn everyone. Nearly all USD transaction go through intermediary banks located within the US, so even if you send a USD transfer from outside the US, you'll still likely get nicked by this law.

Edited March 29, 2010 by gregb

[flying]

So you are telling me there is worse legislation than the dreaded health care bill

How long do we have before these provisions take effect?

As Herr Naam said over a year ago......The US Tax Man will leave no stone unturned.

As the year has progressed it is becoming more & more obvious. Like a poor person going broke they

are now looking under their car seats, under the couch anywhere they may find revenue.

In the end

it will not make a nick in the spending beyond their means they have created. Not to mention the side effect

they also created of job loss & the lack of revenue they get from that income taxes. They have also extended

unemployment benefits to 2-3 years in some spots....Collecting UE has become a career for some.

Yet as you say Health Care, Afghanistan, bail out buddy etc etc spend baby spend

As for how long you have? I have said a few times this past 1+ year has been a gift.... dont waste it.

Edited March 29, 2010 by flying

[Jingthing]

Well we have been required to report accounts that go over 10K USD (or combination of accounts) to treasury already. Recently, the form got more nosy, I guess that was a warning. I am sure they are after sophisticated tax cheaters with this scheme but as usual lots of regular people get caught in the web. This sounds like an issue we are going to have to pay attention to in detail as things start to happen. Also, we will want to share experiences with different Thai banks as to how they are dealing with this. If this is real, I expect some Thai banks will be either not accepting US new accounts or closing existing ones.

Should we be contacting our Thai banks to give them the information proactively?

Edited March 29, 2010 by Jingthing

[lannarebirth]

If this is real, I expect some Thai banks will be either not accepting US new accounts or closing existing ones.

Should we be contacting our Thai banks to give them the information proactively?

IMO, No.

[popeye33]

This is troubling news to those of us who transfer in money from the US to Thai banks to qualify for Thai visas. Anyone knowledgeable who can confirm and explain the implications of this, please do so.

obama wants to know what u doing overseas sir!

cheers.

let me be klear. the march to socialism continues! and its moving quite fast.

[Jingthing]

If this is real, I expect some Thai banks will be either not accepting US new accounts or closing existing ones.

Should we be contacting our Thai banks to give them the information proactively?

IMO, No.

Yes I understand because we don't know how this is going to shake out yet. But many of us live on our incoming SWIFT transfers and having 30 percent withheld could be a real problem, such as when trying to qualify for visas. This is asking too much of the foreign banks. It really is outrageous. That said, seeing the list of what they want, all my Thai bank doesn't know is my SS number --

Name of account holder

Address of account holder

SSN or TIN of account holder

Account number

Account balance

Gross receipts and Gross withdrawls to/from said account

OK, I see this stuff now about accounts UNDER 50K USD making you exempt. So for those of us who don't ever have our non-US accounts go over 50K USD, we don't have to worry about this? Or do we?

‘‘( EXCEPTION FOR CERTAIN ACCOUNTS HELD BY INDIVIDUALS.—Unless the foreign financial institution elects to not have this subparagraph apply, such term shall not include any depository account maintained by such financial institution if—

‘‘(i) each holder of such account is a natural person,and

‘‘(ii) with respect to each holder of such account, the aggregate value of all depository accounts held (in whole or in part) by such holder and maintained by the same financial institution which maintains such account does not exceed $50,000.

Edited March 29, 2010 by Jingthing

[gregb]

This is going to be a software nightmare. I don't know how they intend to start implementing this. I can't believe with these kinds of requirements it is going to be anytime soon. According to this paragraph:

Section 1471( b )(3)

''(3) ELECTION TO BE WITHHELD UPON RATHER THAN WITHHOLD

ON PAYMENTS TO RECALCITRANT ACCOUNT HOLDERS AND

NONPARTICIPATING FOREIGN FINANCIAL INSTITUTIONS.—In the

case of a foreign financial institution which meets the requirements

of this subsection and such other requirements as the

Secretary may provide and which elects the application of this

paragraph—

''(A) the requirements of paragraph (1)(D) shall not

apply,

''( B ) the withholding tax imposed under subsection (a)

shall apply with respect to any withholdable payment to

such institution to the extent such payment is allocable

to accounts held by recalcitrant account holders or foreign

financial institutions which do not meet the requirements

of this subsection, and

''© the agreement described in paragraph (1) shall—

''(i) require such institution to notify the withholding

agent with respect to each such payment of

the institution's election under this paragraph and

such other information as may be necessary for the

withholding agent to determine the appropriate

amount to deduct and withhold from such payment,

and

''(ii) include a waiver of any right under any treaty

of the United States with respect to any amount

deducted and withheld pursuant to an election under

this paragraph.

To the extent provided by the Secretary, the election under

this paragraph may be made with respect to certain classes

or types of accounts of the foreign financial institution.

This means that a bank, say Bangkok Bank, has an account holder, say you, who doesn't want to provide a SSN, there has to be some kind of central reporting system that Bangkok Bank can inform about your recalcitrant status, and then the sending bank is responsible for checking this and doing the 30% withholding.

(BTW, the very act of checking will incur a fee, and the sender of the SWIFT transfer will of course have to pay for that non optional service. Just another way the unscrupulous bankers work with an unscrupulous government to steal more of your money.)

Please understand, THIS ITEM IS NOT OPTIONAL under the law. Any complying foreign bank can elect to use this option, and I'm sure they all will. It's much easier for them. Why would they want to be responsible for managing recalcitrant US entities? The government can always change the law of course, but the way it is written now this facility MUST be available to report recalcitrant customers. That means, they can't implement the rules until some corrupt private company gets some corrupt government contract to build, install, and manage such a reporting system.

Otherwise, what is Bangkok Bank supposed to do? Send a FedEx to every single bank in the world saying "hey guys, if on the off chance someone wants to wire USD to this particular account at my bank, you need to withhold 30% and send it to the US government". Somehow I do not find that realistic.

I'm going to be real curious to see how they implement this.

Does anybody have a US tax accountant they can talk to and get the skinny on when the IRS plans on enforcing all of these provisions? If you do ask him/her, would you be willing to report back to the forum?

This looks god awful complicated. I can see a couple of years of development effort in this specification.