Why do some foreign banks refuse to service US customers

ggt · September 22, 2014

The long arm of the US government...and specifically the IRS...is concerned that they might not know where you keep all your hard earned money...

In order for the IRS to keep tabs on all its citizens...including those living and or working overseas...we have this description from Wikipedia...

FATCA has three main provisions:

It requires foreign financial institutions, such as banks, to enter into an agreement with the IRS to identify their U.S. person account holders and to disclose the account holders' names, TINs, addresses, and the transactions of most types of accounts.^[16] Some types of accounts, notably retirement savings and other tax-favored products, may be excluded from reporting on a country by country basis. U.S. payors making payments to non-compliant foreign financial institutions are required to withhold 30% of the gross payments.^[17]^[18] Foreign financial institutions which are themselves the beneficial owners of such payments are not permitted a credit or refund on withheld taxes absent a treaty override.^[19]

U.S. persons, owning these foreign accounts or other specified financial assets, must report them on a new IRS Form 8938, Statement of Specified Foreign Financial Assets, which is filed with the person's U.S. tax returns if the accounts are generally worth more than US$50,000;^[20] a higher reporting threshold applies to US persons who are overseas residents and joint filers.^[21]^[22]^[23] Account holders would be subject to a 40% penalty on understatements of income in an undisclosed foreign financial asset.^[18]^[24] Understatements of greater than 25% of gross income are subject to an extended statute of limitations period of 6 years.^[25] It also requires taxpayers to report financial assets that are not held in a custodial account, i.e. physical stock or bond certificates.

It closes a tax loophole that foreign investors had used to avoid paying taxes on U.S. dividends by converting them into "dividend equivalents" through the use of swap contracts.^[26]^[27]

So when you are refused service at a foreign bank...because you are a US citizen...it is because the bank refused to comply with the long arm of the US government...

How dare they...humm?