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FATCA effects on banking


Tracey

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The (USA) Foreign Account Tax Compliance Act took effect around the world on July 1, 2014. Under the law, banks from around the world will be asked to sift through their accounts to look for clients with U.S. connections, then share that information with the U.S. Internal Revenue Service.

The U.S. is looking for tax cheats, but others say innocent people are getting caught up in the hunt.

I ask if any of you there in Lake Chapala have been impacted yet by this new law and how? Have you had trouble cashing your pension checks? Extra bank fees to cover their additional paperwork? Thank you.

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We assume FACTA is causing us to have our banking relationships cancelled. Many of us were cancelled by Banamex USA. Many others have lost other money transfer options. It is making it difficult to transfer money from the USA to Mexico and we are not talking about large amounts of money. Most of us transfer less than $2000 a month.

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Banamex-USA has cancelled the accounts of American citizens living here who don't have US addresses.

Mexican banks who also operate in the USA have asked their clients to submit IRS W9 forms to confirm their tax status.

XE.com requires that Americans have a US address and apply for an XE.com account from within the USA.

Many US banks and financial institutions (like Charles Schwab) require people applying for accounts to have US addresses.

Some US banks are requiring their American customers who do business from abroad, like transferring money abroad, to submit IRS W9 forms to confirm their status.

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I ask if any of you there in Lake Chapala have been impacted yet by this new law and how? Have you had trouble cashing your pension checks? Extra bank fees to cover their additional paperwork? Thank you.

Banamex-USA has cancelled the accounts of American citizens living here who don't have US addresses.

Mexican banks who also operate in the USA have asked their clients to submit IRS W9 forms to confirm their tax status.

XE.com requires that Americans have a US address and apply for an XE.com account from within the USA.

Many US banks and financial institutions (like Charles Schwab) require people applying for accounts to have US addresses.

Some US banks are requiring their American customers who do business from abroad, like transferring money abroad, to submit IRS W9 forms to confirm their status.

And your answer to her question is?

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Tracy, I am in Mexico City, not at Lake Chapala, but just this week I discovered yet another impact of FATCA on Internet banking. It was brought to mind by another thread here, about ISP blockers.

I bank at two USA-based banks. Twice each month, I transfer money between those two banks. When I received an electronic deposit at Bank "A" on August 31, I tried to initiate the transfer. WHAT!? Why am I suddenly blocked from making transfers between two banks in the USA? A lot of things went through my mind, but it took a while for light to dawn, and took even more time to get my bank(s) to own up to the truth:

  • anyone who uses an ISP based in Mexico or anywhere else outside the USA is now blocked from making inter-bank (i.e., from any bank to any other bank) transfers, whether those transfers are between banks based in the USA or not. This new rule took effect on August 18, 2014. Your bank is not required to let you know about the change.

The simplest solution to this situation was to install and begin using a VPN, which blocks the identification of the ISP you actually use and shows as a US-based ISP. With some VPN's you can easily change your country to anywhere in the world, depending on what is convenient for you. Obviously changing to the USA for purposes of banking works for us. We turn the VPN on as needed, then turn it off when we don't need to use it (95% of the time). A VPN is perfectly legal for this purpose. The bank actually suggested that we install it. The one we purchased is STRONGVPN; you can use it on as many devises as you need without extra charge. http://www.strongvpn.com I wish I owned stock in it!

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Not to disrespect Cristina and her experience, but for what it's worth, as another blip of anecdotal 'data':


I regularly (average at least once per week) move money between U.S. banks, via bank web site, logged in from an unobfuscated Mexico IP address. I have experienced zero problems to date.


I've done this twice this week, since Labor Day -- once from BECU (Boeing Employees Credit Union) to Ally Bank, once from Ally Bank to Schwab checking. No problems in either case; money showed up today just fine.


Perhaps it depends on what US banks you are using. Cristina, do you feel comfortable sharing which banks have given you trouble?

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Transfers between Wells Fargo and Bank of America. The supervisor at BofA told me, "This policy was put into effect on August 18. You know the situation that exists with money laundering. We are simply protecting our customers and our borders." When I asked how customers like me should handle transfers between USA banks, she replied, "You will need to use a VPN. You know what that is, right?" She also told me that she had recently been in Europe and while there, had herself been unable to transfer money between USA accounts because of the newly instituted policy.

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Transfers between Wells Fargo and Bank of America. The supervisor at BofA told me, "This policy was put into effect on August 18. You know the situation that exists with money laundering. We are simply protecting our customers and our borders." When I asked how customers like me should handle transfers between USA banks, she replied, "You will need to use a VPN. You know what that is, right?" She also told me that she had recently been in Europe and while there, had herself been unable to transfer money between USA accounts because of the newly instituted policy.

I recently did a transfer requesting WF to transfer funds from my BoA accounts..it worked

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Mileage does vary greatly between different people´s experiences -- even when they are dealing with the same two banks. Everyone is not being treated the same for whatever the reasons. It may not be arbitrary but it sure seems that way to the outside observer.

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