FATCA wealth advisers are taking on the financial affairs of US taxpayers that banks and other financial institutions are finding too hot to handle.
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The Foreign Account Tax Compliance Act heaps regulations of financial institutions worldwide with US clients.
The demands include declaring the identity and investment transactions of any US taxpayers listed as clients.
US expats living in the UK number between 600,000 and 1 million. They reportedly finding many banks and wealth managers are rejecting their business so they can sidestep FATCA rules.
FATCA only applies to financial firms with US clients, although Britain and the rest of the European Union are consulting on their own version of the tax reporting law.
Opportunity and profit
HSBC has pledged to axe any US clients with foreign accounts once FATCA starts, while UBS and Brewin Dolphin already decline services to Americans living in the UK.
But where large wealth managers see onerous reporting requirement eating into their margins, smaller outfits see opportunity and profit.
Private wealth managers are opening almost weekly in this niche market fled by the banks.
Brown Advisory, of Baltimore, Maryland, opened a British office earlier in the year in response to the changing financial advice environment for US expats.
“FATCA has given an opening to several small advisers in London as others have shut up shop for American clients,” said a spokesman.
Meanwhile, the US Treasury is grinding on with negotiating and signing FATCA treaties with other nations.
Japan and Bermuda have finalised intergovernmental agreements, while Jamaica and the Bahamas has announced negotiations are under way.
FATCA update
Hordes of small Caribbean countries are either starting discussions with the US or having talks about the talks locally, including the offshore tax havens of British Virgin Islands and Belize.
The US Treasury has cancelled another unpaid furlough day on August 30 – partly because of stress on the internal budget and partly due to work to prepare the way for FATCA.
Besides FATCA talks with at least 50 foreign governments, work is continuing apace behind the scenes.
The online registration system for foreign financial institutions that was due to go live this month has been delayed for a month.
FATCA registration forms and guidance has been drawn up by the Internal Revenue Service and the Treasury.
The next step is vetting foreign financial institutions signing up for FATCA and issuing them with a formal unique identification number to quote to clients and on FATCA communications with the IRS.
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