Global Crack Down On Expat Bank Accounts

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Tax avoidance and money laundering laws are stopping expats opening bank accounts in many countries around the world.

British expats have already complained to the European Commission about problems with opening accounts with UK banks and building societies without having a UK address.

American expats are also facing a banking crisis due to the new Foreign Account Tax Compliance Act (FATCA) laws introduced on July 1.

FATCA requires foreign banks to report bank assets and earnings from assets on accounts controlled by US taxpayers – providing they are more than $50,000 for US residents and $200,000 for expats.

Due to the high costs of implementing FATCA compliance, many foreign financial institutions are reportedly turning away US customers.

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A recent survey by Democrats Abroad, the overseas arm of the US Democrat Party, one in six US expats have had their offshore bank accounts closed.

Banks monitor Saudi salaries

US expats working in the Middle East oil and gas industry are reporting particular problems in opening local bank accounts.

Now Saudi Arabia has announced some extreme measures to curb tax avoidance by expats.

The government aims to run checks on expat bank accounts to search out unexplained income.

The move is designed to spot moonlighting workers who receive a salary for a job which they are allowed to have under the terms of their working visas but also bring in regular money from a job for which they have no permit.

Media and Banking Awareness Committee secretary general Talaat Hafiz explained the new laws will meet several objectives.

“First, we will trace workers who have jobs which their visas do not allow them to take,” he said.

“We will also be able to identify unofficial businesses that are sending money out of the country.”

Police audit financial irregularities

Effectively, expats cannot open a bank account in Saudi Arabia unless the money remitted in to the account is from a business for which they have a work permit.

Banks will be required to personally meet each new client and will have to run identification and permission to work checks before opening the account.

The government also says banks will monitor expat financial transactions to make sure money paid in only comes from a job relating to a work permit.

Any irregular transactions will be reported to the police without telling an expat. They will then face a financial audit.

Hafiz says banks are sitting on applications to open new accounts from millions of expats.

Expats make up around a third of the nation’s population of 30 million.

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