Banks are turning their backs on expats and closing their accounts as governments tighten up tax and money laundering rules worldwide.
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Expats from the US, UK and Switzerland are among those facing the most problems.
From July 1, the new US Foreign Account Tax Compliance Act (FATCA) demands offshore financial institutions must report the details of bank accounts and investments controlled by US taxpayers.
This triggered a flood of account closures worldwide as financial institutions chose not to deal with American clients.
Now the British arm of Spanish bank Santander is reportedly cancelling debit cards of customers living outside the UK.
During the banking crisis, Santander took over Alliance & Leicester, which had thousands of expat clients and has steadily limited their banking services.
The Co-Op Bank has also closed all offshore banking accounts after taking over the Britannia and heading into choppy financial waters.
The media in the UK suggests that Santander is busy closing ‘dormant’ accounts, while the bank commented the accounts are frozen for fraud protection.
British credit card issuers are also closing accounts that they suspect belong to expats as they are stopping the lines of credit for anyone without a UK address.
Now, the influential Swiss Abroad group is urging the government in Switzerland to safeguard the right of expats to have a savings account back home.
Again FATCA and fears of tax issues seem to be behind the moves.
The expat group says Swiss citizens overseas should have an account for their cash in case of financial or political uncertainty in the country where they now live.
Expats too risky
The group reckons many Swiss banks are refusing to do business with expats following a spat with the US Treasury over helping wealthy Americans evade tax. The banks have paid billions of dollars in fines and some have had to close for business.
Apparently, they fear other countries may follow the US lead and threaten criminal proceedings if they help expats with their finances.
Almost 750,000 Swiss expats are affected – and Swiss Abroad is calling for the government backed Post Finance bank to automatically give all expats a savings account. They also want the bank to manage their pensions, declared investments and offer expat mortgages on homes in Switzerland.
The Swiss Bankers Association explained they viewed managing funds from offshore too costly and risky.
“Expats must pay taxes on their income from savings and investments in the country where they live. Informing all these countries of their Swiss holdings simply costs too much money and takes too much time when balanced against the return for the banks.”
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