New tax law causes international banks to give Americans the boot

The U.S. Foreign Account Tax Compliance Act, which is set to go into effect next year, will require businesses to report all assets held by Americans. With the coming of this complicated new law, global banks are choosing to drop American customers rather than figuring out a way to work with the law. Gerard Laures of the financial services tax division at KPMG said: “U.S. citizens living abroad are really having a hard time with their banks.”

The law is in response to years of tax evasion by businesses, which has resulted in hundreds of billions of dollars in loss for the U.S. In order to follow the law properly, basic savings accounts, pension funds, investments, and everything in between will have to be reported. If a business fails to comply, it could be slammed with a 30% tax on U.S.-sourced income.

The new law means a steep increase in cost for the banks, so rather than charging customers more, “many banks have taken the decision to tell U.S. customers to go away,” said Laures.