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The Foreign Account Tax Compliance Act, or FATCA, became law in 2010. It requires financial institutions worldwide to report holdings of “U.S. persons” worth more than $50,000 to the IRS.

Those institutions the IRS deems non-compliant could face a withholding tax of up to 30 percent. The law was designed to go after scofflaws that hide money in overseas accounts, and the IRS expects to collect $7.6 billion over the next decade because of it.

Overseas wealth managers are reportedly dropping American clients, expats are being denied basic banking services, and foreign companies are reportedly less willing to employ Americans — all out of fear of not complying properly with the complex new tax regulations, and the cost of tracking and monitoring FATCA-liable accounts. The number of expats renouncing their U.S. citizenship is also up substantially in the time since FACTA was announced.

Failure to report foreign financial assets on Form 8938 may result in a penalty of $10,000 (and a penalty up to $50,000 for continued failure after IRS notification). Further, underpayments of tax attributable to non-disclosed foreign financial assets will be subject to an additional substantial understatement penalty of 40 percent.

The unintended impact of FATCA means financial institutions are shunning US expats who now have an ever decreasing number of places to turn to for financial advice and a dwindling number of investment products to choose from and potentially big increases in tax liabilities.

FATCA came into effect the 1st of July 2014 and is the strictest tax reporting regime ever imposed on US expats. Americans on foreign soil need to start planning to ensure their wealth ambitions and aspirations are not blown apart by the impact on savings.

·         From the Dollar Vigilante………………….Jeff Berwick

·         Redmond Weissenberger

·         Justin O’Connell

·         Ed Bugos

the dollar vigilante blog

Breaking News: US Expats in Mexico Left Stranded In Latest FATCA Escalation

[Editor’s Note: The following post is by TDV Editor-In-Chief, Jeff Berwick]

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.

Here, here and here you will find three separate online discussions surrounding Banamex USA’s summary closure of American’s accounts.

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 have contacted who are confused about what is 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.


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 (this is a process that TDV Passports can help with).  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.

We also predict that more countries in the West will begin to enact FATCA like controls as the economy in the West continues to fall and governments begin to enact more egregious worldwide taxation laws.  In the case of Canadians, for example, many “snowbirds” (those that are retired and usually spend six months or more per year in the US) are beginning to be deemed “US resident” even without their knowledge and will soon find themselves under attack by the IRS for tax liabilities.  As well, the Canadian and US governments have reached all manner of agreements tying the sharing of financial information between the two countries.

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.

Actually FACTA will help real estate here.    Affluent Americans will want to get a lot if not all of their money out of the US.   They will probably look for a climate like here, safety and ease of acquiring citizenship.

To me Ajijic looks viable.   There is a problem with too many people living only on Social Security here now.   Poor people attract more poor people.  AARP was their stimulus package to move here.

Too many lower class people would likely see the more affluent to look to areas like PV or San Miquel.    If the criteria is met in Ajijic, and info gets out through Wealth Management companies advocating this area, then prospects here could be interesting.

Citizenship is the key word in the future.

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