Russia, China, and FATCA

Russian lawmakers have said it is against the law for Russian banks to implement FATCA.

Dateline: Belgrade, Serbia

In just over one month, the United States government will have full implementation of one of the most arrogant and draconian assaults on sovereignty in modern human history: FATCA.

While you are likely familiar with FATCA, let’s review: a few years ago, the Obama-led US government decided to go on a campaign of massive financial imperialism, passing a law that forced every other sovereign nation on earth to be an unpaid tattletale for the IRS.

Basically, the US used its unique position as a center for global movement of cash to impose a special 30% “withholding tax” on the assets of any foreign financial institution — offshore banks, brokerage houses, etc. — that refuse to turn over all financial details on US persons to the IRS.

 

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Banks like TD Bank in Canada have reported that becoming FATCA compliant has cost them at least $100 million. For all of American liberals’ complaints over “creating jobs offshore”, the booming FATCA compliance industry seems to be doing just that, as banks spend billions of dollars to cater to American whims.

FATCA is a large part of the reason it’s becoming nearly impossible to open an offshore bank account if you’re an American. In fact, I recently advised US persons to flat out AVOID several banking jurisdictions for this very reason; it’s not worth wasting your time.

Numerous readers have told me they tried to open a bank account in Singapore, only to be rebuffed until they used one of the suggestions in my Guide to Banking in Singapore. It’s getting tougher all over the world.

It is up to each country to make sure their financial institutions comply with FATCA. Some nations have claimed their banking laws do not allow for such information exchange with the US government.

Of course, plenty of others have done the exact opposite and lined up to appease the US government. Some of these governments have jumped at the idea that they could get reciprocal information on their own citizens (which FATCA wasn’t designed to do).

As a US person, you still have an obligation to report any offshore bank account or accounts with an aggregate balance of $10,000 or more. There are other requirements for people with higher net worths.

However, here are just two countries that appear that they will NOT implement FATCA, or at least are strongly considering not cooperating in full:

Russia

Just last week, Russian lawmakers warned Russian banks that implementing FATCA and sharing information was illegal under their laws.

Considering the recent scuffles between Russia and the United States, this should hardly come as a surprise. Russia is even more eager than China to show the United States who is boss.

In fact, Sberbank is one of the easiest banks here in Europe with which to open a bank account. Some of the countries they do business in make it hard for foreigners to bank there without proper paperwork, but several of the countries I’ve been in lately have Sberbank branches all too eager to open accounts.

Many readers may not trust Vladimir Putin and his intentions. However, Russia offers Americans another opportunity to bank with a jurisdiction that doesn’t bend over for the United States.

China

I’ve spent a lot of time in China. While it wouldn’t be my first choice of places to live, I could live there if I needed to. I have a lot of Chinese friends and I speak out in favor of the country’s business-minded culture frequently.

This is why.

For all of the talk about “evil China”, I believe the most far-reaching empire in modern history — The Land of the Free — works better when it has some checks and balances. China is the biggest check and balance currently in place.

The Chinese don’t want to be pushed around. They don’t want to be a puppet for US financial imperialism. And it looks like China will be saying “no, thank you” to implementing FATCA.

A recent Wall Street Journal article suggested China would likely sign on. However, I believe China will not bend so easily, even if some banks are readying projects that are FATCA-related.

China is working on its own FATCA-style law to stop tax evasion by Mainlanders, but I also suspect they will run in to more trouble than the USA.

Keep in mind, Hong Kong is signed on to implement FATCA’s basically one-way information exchange.

Other countries unlikely to implement FATCA

There are plenty of small frontier markets that are not expected to sign on to FATCA. How does banking in Cambodia sound? I wrote last year about my concerns with banking in the country’s micro-finance institutions that offer interest rates upwards of 9%, but some of my emerging market expert friends have said they would gladly put a small part of their assets there.

Nearby Laos is also not expected to sign on to FATCA, and of course, blacklisted countries like Iran, Cuba, and North Korea won’t either.

Besides the Argentina-level high inflation in Iran, thanks to Uncle Sam you couldn’t get an account there if you wanted to.

Of course, there are plenty of nations that do ask “how high?” whenever the United States says “jump!” Unfortunately, this includes much of Central America and the Caribbean, where many easy-to-use offshore banks exist.

Our friend Peter Schiff’s offshore bank in St. Vincent and the Grenadines is one of a handful of exceptions, shutting out Americans entirely to avoid paying the small fortune it would cost to be FATCA compliant.

Meanwhile, jurisdictions like Belize don’t offer nearly as much bank secrecy as they promise. Many countries in the Americas have already signed away their rights in disarming treaties that go beyond what FATCA would have done to them.

It has been debated whether countries like Guatemala need to sign FATCA as they may not need as great of access to the US financial system.

However, nations like Switzerland have a huge need for FATCA, which is why most European nations have signed. The US government has essentially used financial blackmail against countries, like Switzerland, whose banks require access to the US financial system.

If you are currently not a US person and are considering becoming one — such as through an EB-5 investment visa — you should be aware that this is the type of nonsense you are in for. I don’t care how much of a “status symbol” a US green card or passport may be; it just isn’t worth the madness that comes with laws like FATCA.

If you already are a US person, consider our premium resources for more help on finding banking jurisdictions that are FATCA compliant. You don’t have to get bogged down in the minor details, but you do need to know where you can go to open an account without hassles.

Learn how to crack the code and legally pay zero tax while traveling the world.

Watch our Nomad Capitalist Crash Course.

Andrew Henderson

Andrew Henderson

Andrew has been internationalizing since 2008, and has learned what works and what doesn't work when it comes to reducing taxes, increasing personal freedom, and creating wealth. Click here to work with him personally.
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