As an expatriate, times can be free and easy-living in a different country, enjoying a different culture. But times can also be tough. More and more, Non-Resident Americans are finding it difficult to get U.S. investment services. As policy changes, Americans who remain clients of U.S. financial institutions are finding their services are restricted. This article details the changes expatriates are facing and some of the reasons behind these new infrastructure.
With the introduction of FATCA, where foreign bank accounts can be imposed a significant tax, U.S. Non-Residents are finding it increasingly difficult to find a financial institution. Although it is more difficult for an American expatriate to find a Non-U.S. financial institution, U.S. financial institutions are also turning away U.S. Non residents. While FATCA regulation is a driver, enhanced treasury enforcement of anti-money laundering regulation and evolving interpretation of the 2003 Patriot Act are also a culprit.
In addition to increasing difficulty in finding financial services, Non-Resident Americans are simply restricted from owning U.S. Mutual Funds. Reported initially by the Wall Street Journal, many U.S. mutual fund companies have implemented policies which prevent non-U.S. residents from purchasing their funds, including Americans abroad.
However, the rules regarding this restriction are nothing new. Rules preventing non-U.S. residents from purchasing
mutual funds are decades old. It is modified due diligence procedures, however, which have resulted in more thorough compliance of these long standing regulations. The reason for this restriction is because U.S. fund groups are not allowed to solicit overseas business for SEC-registered funds. This includes U.S. expatriates as well. Offering shares of mutual funds to non-domestic clients could potentially violate laws of foreign countries which they reside in. Second, due to tax treaty claims, funds must certify all shareholders are residents of the United States.
As an expatriate, navigating the U.S. financial system is murky waters. Speak with your financial advisor today to get set up with a financial institution who has your peace in mind and in addition that will help with your financial goals.