Many people laughingly remember the image of the Soup Nazi in Seinfeld. If you did anything out of order or that he didn’t like, “No soup for you!”
Sadly, thanks to the upcoming Foreign Account Tax Compliance Act (FATCA) in the US, banks around the world are turning away US passport holders, “No bank account for you!” But you don’t even have to do anything wrong other than having been born a US citizen.
Decades ago holding a US passport was a ticket to worldwide opportunity. Today it is nearly the opposite. First it started with the erosion of the US’s reputation as a bastion of freedom. Then, legislation-after-legislation made it nearly impossible to do business with US persons as the nation became increasingly paranoid and fixated with raising funds.
Faced with draconian penalties on foreign banks who accept US citizens countless banks worldwide are deciding it is easier and safer to just turn away all US customer business. Not to mention much cheaper.
This has been the case for a long time in regards to investments and brokerages. The SEC has made it clear to anyone worldwide that if you even offer investment opportunities to US citizens they will come after you with the full power of the US government. The reason, they say, is to protect the fragile and gullible American citizens from losing money in foreign investment opportunities. What it really does is limits the investment options of Americans dramatically … at a time when the US economy is tanking and other economies around the world have been booming.
One such example is at Peter Schiff’s EuroPacific Capital in St. Vincents. EuroPacific has a great option … you can actually hold gold with them and have an ATM card where you can withdraw fiat dollars from your gold holdings. He opened up operations there because opening it within the US would have been too difficult regulatorily (sound familiar?). But, in order to get outside of those regulations they also do not allow American clients. In fact, they go so far as to not even answer the phone if it comes from a US area code!
BANKS RAPIDLY SHUTTING DOWN US CLIENTS
With thousands of banks in the world it is impossible to keep track of the changes taking place. But it will probably become a rule-of-thumb that international banks simply do not accept US clients … in fact, most banks we deal with at TDVOffshore do not accept US clients.
Most information we receive just comes from US passport holders who have recently had their accounts closed down or were denied application. The future is clear: banks are no longer accepting Americans because of FATCA. From Europe to Asia to the Caribbean the same is true.
The decision is simple for banking institutions. In fact, it is merely an issue of the bottom line. It is not worth it to track and report the data they are now required to under FATCA.
Bobby Casey, a good friend of TDV who deals with international banks all the time recounted recent experiences he has been having. Meeting with bank representatives, “I asked if there were any changes to the bank’s policy on accepting American clients. The answer was yes. They no longer accept Americans as of March 1st, 2014. The reason – FATCA. We have another Caribbean bank we work with that has, as of February 1st, stopped accepting American clients. Just this week one of my business partners walked into a local bank in Latvia to open an account and they rejected him. Why? He is American.”
OVER-LEVERAGED US BANKS
By hemming in Americans to keeping their money in US banks it creates a number of serious risks to their capital.
The US banking system is leveraged at 13-to-1, which means that an 8% drop in asset values will destroy all US equity. It’s worse elsewhere: Japan’s banks are leveraged at 23 to 1. France’s are 26 to 1. Germany is 32 to 1. But the US’s own Federal Reserve is by far the most over-leveraged at 53 to 1.
That means the Federal Reserve, which has bailed out the world to the tune of trillions of dollars, is more over-leveraged than many of the institutions it is supposed to help.
That is twice as over-leveraged as the European Union banking system, which, as you may remember, housed the Cyprus banks, which ultimately collapsed. It is no wonder why they want to keep all their money domestically! All the easier “bail-in” when the time comes.
Either that or they will have to print a torrent of more money to keep the system alive … leading to hyperinflation and destruction of the dollar.
FATCA GOES GLOBAL
At the same time, many nation-states all over the world are drafting legislation to put them on par with US post-FATCA. To comfortably bank anywhere in the world is steadily becoming a thing of the past. Yesterday we reported (“Governments Worldwide Adopting FATCA Style Legislation“) that Russia has introduced its own FATCA-style legislation.
It is all a nefarious form of capital controls that is descending on many countries throughout the world. Rather than tell you that you can’t take your money out of the country (straight-up capital controls) they just pressure banks around the world to not accept your citizens as clients … or to report all transactions back to them like an unpaid tax collector … which most banks do not want to go through the trouble to do.
For this reason, we have again set-up an urgent conference, the TDV Wealth Management Crisis Conference in Cabo San Lucas from April 30th-May 4th.
There are still ways to internationalize your funds and protect them from the prying eyes and outstretched claws of your government but it is not looking good in the near future. As governments around the world continue to implode under record-breaking amounts of debt they will continue to take their own citizens wealth at ever-increasing levels.
There are still legal and viable options to protect yourself from that as I have personally done nearly a decade ago … but if you still haven’t begun to prepare I’d be running not walking to do so. When it comes to your and your family’s hard-earned wealth it is always better a year or two early than a day too late.
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.