FATCA, A Time Bomb That Has Yet To Explode But Most Definitely Will.

Yesterday over coffee, a friend of mine leaked the news that JP Morgan’s private banking division If you are having trouble viewing this email, or you'd like to share this article with your friends, click here

July 1, 2015 Singapore Yesterday over coffee, a friend of mine leaked the news that JP Morgan’s private banking division here in Singapore is going to start charging negative interest rates. I almost fell out of my chair. He’s a successful hedge fund manager and one of their best customers. So when he received the notice, he rang up his private banker and demanded to know why. Between ridiculously low interest rates (banks are closing loans here for 0.9% or lower) and the increasing costs of compliance, “we can’t make money anymore...” was the response. It certainly paints a clear picture of how screwed up the entire financial system is. Compliance is a major component in this. Bankers around the world are buried up to their eyeballs in paperwork and regulations now. They can’t make a move or approve a single transaction without first doing anti-money laundering, terrorist financing, and tax evasion due diligence. Imagine it like this: your banker rings you up tomorrow and says, “The government of China requires us to have all of our depositors fill out this paperwork. So I need you to send this form back to me ASAP…” You’d probably think it was a joke. Or at a minimum think, “Wait, what? I’m not Chinese. You’re not a Chinese bank. Who cares about some stupid Chinese regulation?” And you’d be right. Except that’s precisely what the United States is doing right now. All over the world, bankers are contacting their customers and forcing them to fill out paperwork to comply with idiotic US government regulations. Even when there’s no connection to the US. Here in Singapore, the bankers are completely miserable about it. They’re so angry for having to call customers and say, “Yes I know you’re in India, and I know we’re in Singapore, and I know you’ve been a customer for 10 years. But you still have to fill out this US government form or else we’ll close your account.” It’s ridiculous-- all of this because the US government is bankrupt. A few years ago they passed the Foreign Account Tax Compliance Act (FATCA)-- a major part of their crusade to stamp out tax evasion and bring in more tax revenue. FATCA is now in full force. Banks all over the world have been forced to enter into information sharing agreements with the IRS, meaning that they have to report on all of their customers and force them to fill out meaningless forms. Needless to say, this costs a lot of money. If you own a business, you can just imagine how frustrating and expensive it would be to have your employees toil away on senseless paperwork instead of... you know, doing real business. The US government tells us that all of these disclosure programs have brought in about $6.5 billion in tax revenue. Yet the costs of compliance are estimated to cost at least $8 billion, with some estimates over 10x higher. Now that’s a neat trick. Uncle Sam gets the money and passes off the costs to everyone else. And those who don’t comply with America’s rules are destroyed. The most blatant example of this was last year, when a French bank was fined $9 billion for doing business with countries that Uncle Sam didn’t like. Bear in mind, this was a French bank, not an American bank. They violated no French laws. Yet they had to pay the US government $9 billion for doing business with places like Cuba. (Ironically, Cuba is now BFFs with the United States, but it’s not like the bank is going to get a refund.) More recently, the US government destroyed an Andorran bank that was accused of weak anti-money laundering controls. And a few years ago they took down the oldest private bank in Switzerland. Every bank in the world has seen these incidents, and they’re scared. They could be next. And that’s why you can’t get a single financial transaction done anymore without first submitting a mountain of paperwork to prove that you’re not a terrorist. Or financing terrorists. Or laundering money. Or doing business with the Axis of Evil. Even outside of banking it has become utterly ridiculous. A friend of mine here runs one of the largest bullion depositories in Singapore; he wanted to buy some raw gold and have it made into bars, so he contacted a refiner. The refiner said, “Sure no problem. I just need you to send us some compliance documentation before we get started.” Then he sent a list of no fewer than 22 items that he needed to submit-- copies of licenses, passports, certificates, etc. 22 items. Just to have a refiner make some gold bars. Ridiculous. So obviously they’re not going to waste their time. Which means there’s some business that could have been done, but won’t, simply because of the compliance costs. The US government has really screwed the world on this. Paperwork is the priority. Not business. And all because America is bankrupt. This trip to Singapore has been very eye-opening for me as I’m just now starting to understand how much people within the financial system despise the US government. They feel like they’re being forced at gunpoint to be volunteer spies and tax collectors, simply because US politicians have been financially irresponsible. And to me, it’s the biggest sign yet that America’s financial dominance is coming to an end. They’ve essentially engineered it themselves by alienating the whole world. The transition isn’t going to be smooth. And it won’t happen overnight. But there will come a time, and likely soon, when the United States gets displaced. And the rest of the world can hardly wait. Until tomorrow,  Simon Black  Founder, SovereignMan.com

The Days Of Secret Off Shore Bank Accounts Is Long Gone Under FATCA

IRS Nets Offshore Data From 77,000 Banks, 70 Countries In FATCA Push

Posted by Steven Maimes, Contributor - on June 4th, 2014

Forbes article by Robert W. Wood 

An astounding 77,000 banks and financial institutions—even some in Russia—have registered under FATCA—the Foreign Account Tax Compliance Act.

America’s global tax law requires foreign banks to reveal American accounts holding over $50,000. Non-compliant institutions could be frozen out of U.S. markets, so everyone is complying. The fact that 77,000 banks have registered and some 70 countries are providing government help to the IRS means almost no foreign account is secret.

And as the scramble of U.S. persons with accounts gets into high gear, the IRS has published a searchable list of financial institutions. See FFI List Search and Download Tool; plus a User Guide. Countries on board are at FATCA – Archive. With Swiss bank deals, prosecutions, summonses, and now FATCA, the IRS has quicker, better and more complete information than ever.

Foreign Financial Institutions (FFIs) must report account numbers, balances, names, addresses, and U.S. identification numbers. There is 30% withholding on anyone who doesn’t report. With teeth like never before, Americans must report worldwide income and many must file IRS Form 8938 to report foreign accounts and assets.

Separately, U.S. persons with foreign bank accounts exceeding $10,000 must file an FBAR by each June 30. Tax evasion can mean five years in prison and a $250,000 fine. Filing a false return can mean three years and a $250,000 fine.

FBAR failures can mean fines up to $500,000 and prison up to ten years. Non-willful civil FBAR violations mean a $10,000 fine. Willful FBAR violations can draw the greater of $100,000 or 50% of the account for each violation (and each year is separate). The numbers add up fast, exceeding the 27.5% Offshore Voluntary Disclosure Program penalty, as reported here: Court Upholds Record FBAR Penalties, Exceeding Offshore Account Balance.

The ink is hardly dry on Credit Suisse’s guilty plea to U.S. tax charges. But the penalty must still smart. The bank agreed to a record $2.6 billion fine for actively helping Americans hide money to avoid taxes.

With UBS, Credit Suisse and a dozen banks still under criminal investigation by the Justice Department, that is only a drop in the international bucket. And more banks are lining up, causing many account holders to wonder What To Say When (Not If) Your Offshore Bank Asks, ‘Are You Compliant With IRS?‘

Already, more than 40,000 account holders have participated in the IRS program, and the smart money suggests resolving any unresolved issues. U.S. account holders who aren’t compliant have limited time to get to the IRS before names are disclosed. And it’s clear that the IRS’ preferred choice is for account holders to go into the Offshore Voluntary Disclosure Program, also known as the OVDP.

It involves reopening up to 8 tax years, and paying taxes, interest and penalties, but no prosecution. It is a good deal compared to the alternatives, but some account holders balk at the penalty that equals 27.5% of the highest balance in the offshore accounts. Some people are willing to pay the taxes they owe, but not the 27.5% penalty.

As a result, some people want to amend their taxes and file FBARs outside the OVDP. The IRS calls this a “quiet disclosure” and IRS Hunts Quiet Disclosures, First Time FBARs. That might mean prosecution or large civil FBAR penalties.

The safest choice is the IRS OVDP program. For some, though, one of the forms of relief provided in the IRS frequently asked questions may be available. After all, the IRS Gives Big Break To Some Offshore Account Holders.

FATCA is making banking transparent virtually worldwide. In fact, with the help of the U.S. Congress and the U.S. Department of Justice, arguably, the IRS should have a new slogan: Today Switzerland, Tomorrow the World.

Source:   forbes.com

Posted by:  Steven Maimes, The Trust Advisor

Permalink:  http://thetrustadvisor.com/news/fatca-2

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FATCA, Foreign Account Tax Compliance Act

For Those Dreaming Of Retiring Overseas, FATCA Will Stop You!

URL and to post comments: http://dollarvigilante.com/blog/2014/3/25/us-citizen-no-foreign-bank-account-for-you.html Tuesday,March 25, 2014 [Editor's Note: The following post is by TDV Editor-in-Chief, Jeff Berwick] Many people laughingly remember the image of the Soup Nazi in Seinfeld.  If you did anything out of order or that he didn’t like, “No soup for you!” Sadly, thanks to the upcoming Foreign Account Tax Compliance Act (FATCA) in the US, banks around the world are turning away US passport holders, “No bank account for you!” But you don't even have to do anything wrong other than having been born a US citizen. Decades ago holding a US passport was a ticket to worldwide opportunity.  Today it is nearly the opposite. First it started with the erosion of the US's reputation as a bastion of freedom. Then, legislation-after-legislation made it nearly impossible to do business with US persons as the nation became increasingly paranoid and fixated with raising funds. Faced with draconian penalties on foreign banks who accept US citizens countless banks worldwide are deciding it is easier and safer to just turn away all US customer business.  Not to mention much cheaper.  NO INVESTMENTS OR BROKERAGES FOR YOU EITHER This has been the case for a long time in regards to investments and brokerages.  The SEC has made it clear to anyone worldwide that if you even offer investment opportunities to US citizens they will come after you with the full power of the US government.  The reason, they say, is to protect the fragile and gullible American citizens from losing money in foreign investment opportunities.  What it really does is limits the investment options of Americans dramatically… at a time when the US economy is tanking and other economies around the world have been booming. One such example is at Peter Schiff’s EuroPacific Capital in St. Vincents.  EuroPacific has a great option… you can actually hold gold with them and have an ATM card where you can withdraw fiat dollars from your gold holdings. He opened up operations there because opening it within the US would have been too difficult regulatorily (sound familiar?).  But, in order to get outside of those regulations they also do not allow American clients.  In fact, they go so far as to not even answer the phone if it comes from a US area code! BANKS RAPIDLY SHUTTING DOWN US CLIENTS With thousands of banks in the world it is impossible to keep track of the changes taking place. But it will probably become a rule-of-thumb that international banks simply do not accept US clients...in fact, most banks we deal with at TDVOffshore do not accept US clients. Most information we receive just comes from US passport holders who have recently had their accounts closed down or were denied application. The future is clear: banks are no longer accepting Americans because of FATCA. From Europe to Asia to the Caribbean the same is true.  The decision is simple for banking institutions. In fact, it is merely an issue of the bottom line. It is not worth it to track and report the data they are now required to under FATCA.   Bobby Casey, a good friend of TDV who deals with international banks all the time recounted recent experiences he has been having. Meeting with bank representatives, "I asked if there were any changes to the bank’s policy on accepting American clients.  The answer was yes.  They no longer accept Americans as of March 1st, 2014. The reason – FATCA.  We have another Caribbean bank we work with that has, as of February 1st, stopped accepting American clients.  Just this week one of my business partners walked into a local bank in Latvia to open an account and they rejected him. Why?  He is American." OVER-LEVERAGED US BANKS By hemming in Americans to keeping their money in US banks it creates a number of serious risks to their capital. The US banking system is leveraged at 13-to-1, which means that an 8% drop in asset values will destroy all US equity.  It's worse elsewhere: Japan’s banks are leveraged at 23 to 1. France’s are 26 to 1. Germany is 32 to 1. But the US's own Federal Reserve is by far the most over-leveraged at 53 to 1.  That means the Federal Reserve, which has bailed out the world to the tune of trillions of dollars, is more over-leveraged than many of the institutions it is supposed to help.  That is twice as over-leveraged as the European Union banking system, which, as you may remember, housed the Cyprus banks, which ultimately collapsed. It is no wonder why they want to keep all their money domestically! All the easier "bail-in" when the time comes. Either that or they will have to print a torrent of more money to keep the system alive... leading to hyperinflation and destruction of the dollar. FATCA GOES GLOBAL At the same time, many nation-states all over the world are drafting legislation to put them on a par with US post-FATCA. To comfortably bank anywhere in the world is steadily becoming a thing of the past. Yesterday we reported ("Governments Worldwide Adopting FATCA Style Legislation") that Russia has introduced its own FATCA style legislation.  It is all a nefarious form of capital controls that is descending on many countries throughout the world.  Rather than tell you that you can’t take your money out of the country (straight-up capital controls) they just pressure banks around the world to not accept your citizens as clients… or to report all transactions back to them like an unpaid tax collector… which most banks do not want to go through the trouble to do. For this reason, we have again set-up an urgent conference, the TDV Wealth Management Crisis Conference in Cabo San Lucas from April 30th-May 4th. There are still ways to internationalize your funds and protect them from the prying eyes and outstretched claws of your government but it is not looking good in the near future.  As governments around the world continue to implode under record-breaking amounts of debt they will continue to take their own citizens wealth at ever-increasing levels.  There are still legal and viable options to protect yourself from that as I have personally done nearly a decade ago… but if you still haven’t begun to prepare I’d be running not walking to do so.  When it comes to your and your families hard earned wealth it is always better a year or two early than a day too late.

Anarcho-Capitalist.  Libertarian.  Freedom fighter against mankind’s two biggest enemies, the State and the Central Banks.  Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast,Anarchast.  Jeff is a prominent speaker at many of the world’s freedom, investment and gold conferences as well as regularly in the media including CNBC, CNN and Fox Business.