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As the first set of Foreign Account Tax Compliance Act (FATCA) compliance issues for banks worldwide is set to come into effect on July 1 we have seen a flurry of banks around the world advising US citizens that they will be immediately closing their accounts.
None has been so far reaching as this notice sent to US citizens who have accounts at Banamex USA in Mexico this week, however.
Banamex USA's parent, Banamex, is the second largest bank in Mexico and there are over 1 million US citizens living in Mexico, by far the largest amount of any country, and so this news will be felt over a very widespread area.
Notices have begun to be sent by Banamex USA, a bank operating in Mexico and used by many American expats in Mexico, to all US citizens notifying them that their accounts will be closed within 30 days.
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In most of the forums people know the reason why - FATCA - but in one of the forums in particular the people are not even aware of FATCA and its implications. This action by Banamex USA is, of course, because of FATCA, which has forced 77,000 banks in 70 countries to surrender all information on American customers to the Internal Revenue Service (IRS) or be extorted and possibly put out of business altogether.
Banamex USA, a subsidary of Citibank with its headquarters in Los Angeles, has sent letters to many US customers informing them that their accounts will be closed June 30. As one online commenter wrote:
"No more SS check deposits: no more linking of accounts to Banamex Mexico, no more credit card, no more ATM for free, no more nada."
One customer was told that it was a "bank decision" with no reason given why. This move has left former account holders scrambling to find a bank that will let them open an account without their presence in Mexico, something likely impossible to find.
It does not appear that all accounts will be closed, but nobody knows Banamex USA's strategy here, even banking insiders in the US who we've contacted are confused about what's going on.
What's for sure is this: Are you an American expatriate living abroad or an American currently thinking of moving abroad? This could, and likely will, happen to you.
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There are many ways to protect yourself and to sidestep many of the issues that FATCA will be bringing upon US citizens trying to transact in the financial system worldwide.
In the case of Americans who live and/or spend a large amount of time each year in Mexico one solution is to attain Mexican citizenship. By doing this you can still have bank accounts in Mexico if you so chose as you can open the account as a Mexican citizen, not as a US citizen, thereby not being restricted by banks that do wish to deal with US citizens due to the egregious nature and expense of filing with the US government all transactions of US citizens.
Having a second citizenship, especially for US citizens, is a very prudent move as it has become very difficult to do anything financially, worldwide, as a US citizen. It also has a tremendous amount of side-benefits including large tax breaks (up to nearly $200,000 per year, tax free, for a married couple if they live outside of the US)... and if you choose to renounce your US citizenship the benefits can be massive for those with a high net worth or income as this would unchain US citizens from the worldwide taxation imposed on them by the US government.
Other options that are still available to US citizens is to re-organize their affairs internationally using things like offshore trusts which are specifically set-up in a way that FATCA regulations do not apply to it. This is a service, for high net worth (over $1 million) US citizens that is offered exclusively by TDV Wealth Management (TDVWM). TDVWM has recently held two Crisis Conferences in Panama and in Mexico helping US citizens stay ahead of the curve and to organize their affairs prior to events, which we predicted, such as more banks worldwide closing accounts for Americans.
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As we've researched and written here and at TDV Wealth Management Crisis Conferences (which we will be holding another one soon, likely in Mexico due to recent events), FATCA is very real and Americans abroad will be forced to adapt and quickly. Many might simply end up without a bank account altogether and unable to open one abroad when they get this now all-too-common letter that your bank no longer wants to serve you.
We hate to constantly be the bearer of bad news but those who have been following TDV know that we have been warning of these events for a number of years. And we expect things to go nowhere but downhill from here as governments in the West implement nefarious capital controls such as FATCA.
Stay tuned at The Dollar Vigilante blog as we continue to cover FATCA and its consequences and offer insights, news, analysis and solutions to protect yourself at The Dollar Vigilante newsletter. And pass along this particular news to US citizens who are Mexican expats to inform them to prepare for more bank account closures for US citizens and what they can be doing about it to protect themselves.
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.
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| • R E A D E R S ' C O M M E N T S • |
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Dear Editor: I never question what you post but there is always a first. This "story" is not news, it is not accurate and it is one person's opinion that I think could be very harmful to business. I have not mentioned Banderas News in my [FB] posts, but I think that this story will be doing a disservice to people, especially foreigners with interests here who avidly follow your website as a source for real news about Mexico.
- Mary Elizabeth O'Connor, General Counsel Tropicasa Realty
Dear Maria: I understand your concerns - and that the author is "pumping" his services - but we didn't just post the story without researching it. There are many recent posts not only on the Lake Chapala blog, insidelakeside.com, (which is referenced in the article) with comments and complaints made by many expats regarding this issue, but also on chapla.com. Though, to the best of my knowledge, there are no Banamex USA branches here in Vallarta, it seems to be an issue in the Guadalajara area. I will look into it further today. Thanks for your input. - BN Editor
This might help: snopes.com - Mary Elizabeth O'Connor, General Counsel Tropicasa Realty
I am writing in reference to your article about banks closing US customers accounts. I know there are some people negating this, but this did happen to me. Whether it was because of the new rules or not, I do not know. As somebody who owns property in PV and absolutely loves it there, this story is certainly not one that I would make up or use to try and "scare" people, which is what I was accused of doing on another [local] news network. I have also heard of others having their bank accounts blocked. I just wanted to bring this to your attention as I feel it is a very worthy piece of information for the expat population in PV. - Melanie Vaez-Iravani
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