Why Foreign Banks Are Shunning American Millionaires
As a result of the Foreign Account Tax Compliance Act, some of the world’s largest wealth management firms, including HSBC Holdings, Deutsche Bank, Bank of Singapore, and DBS Group Holdings, are turning down wealthy Americans’ business. They stand to lose a lot if they don’t comply with U.S. laws. Non-U.S. firms that don’t abide by American regulations are subject to 30% withholding of dividends, interest, or the sale of assets made by them or their customers. While many foreigns banks disapprove of these terms, for obvious reasons, American lawmakers maintain that the government should be tougher on offshore tax crime.
In order to avoid the taxes that must be paid when opening foreign accounts, some Americans are going as far as to renounce their citizenship. Also, Canada should see an increase in American clients as the Royal Bank of Canada is one of only a few wealth managers with a Securities and Exchange Commission license and U.S.-compliant investment advice in Switzerland and London. Similar banks should see an increase in American clients as well, and those that don’t have this feature may even create whole new departments to deal with American regulations.
Written by: Constantine Kostikas