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U.K. Wealth Managers Restrain Advice to U.S. Millionaires as Tax Evasion Rule Looms by Mark miller
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U.K. Wealth Managers Restrain Advice to U.S. Millionaires as Tax Evasion Rule Looms by MARK MILLER
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| Article Posted: 08/13/2013 |
| Article Views: 54 |
| Articles Written: 12 - MORE ARTICLES FROM THIS AUTHOR |
| Word Count: 516 |
| Article Votes: 0 |
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U.K. Wealth Managers Restrain Advice to U.S. Millionaires as Tax Evasion Rule Looms |
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Finance & Investment
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American citizens living in the U.K are struggling to get financial advice as private client and wealth managers turn away clients with links to the U.S. This is due to an impact of the implementation of Foreign Account Tax Compliance Act, known as FATCA, which seeks to prevent tax evasion by Americans who have offshore accounts. The law signed by Barack Obama in March 2010, requires financial institutions outside the U.S. to disclose the identity and activity of American clients with more than $ 50,000 in an account. The legislation is aimed at detecting US citizens who evade federal income taxes by holding investments in foreign financial institutions. However, the importance it places on many wealth managers and private banks in the UK has forced some internationally renowned banks which provide wealth management advisory services to rethink their business strategies, HSBC, Deutsche Bank, Bank of Singapore and DBS Group Holdings have all turned away businesses, to avoid scrutiny from the U.S. The 2010 law which was to be phased from 1st January, 2013, requires financial institutions based outside the U.S to disclose, obtain, and report information about income and interest payments accrued to the accounts of American clients. The introduction of the law would mean additional compliance costs for banks and fewer investment options and advisers for U.S. citizens living abroad, which will hamper their ability to generate maximum returns on their investments. Other advisory firms who have stopped offering services to Americans in the UK include UBS and Brewin Dolphin. HSBC, more popularly called by cyber security experts and the media as heroin smuggling bank and notorious for supporting money laundering activities has told that it is not giving any investment advisory services to U.S. clients with foreign accounts. Fear of huge penalties and criminal prosecution are haunting investment advisory firms and banks in the U.K. Dominic Gamble who helps his clients to get a wealth manager suiting to his or her businesses said a small number of private banks will work with US citizens, but they typically will not accept clients with less than an account opening size of £ 2 million. The new law will hit hard on the Americans living in the U.K., there are 126,330 U.S. passport holders residing in England and Wales, of whom 48,062, or 38 percent live in London, as per data obtained by the Office for National Statistics. Jason Choi, a Singapore based lawyer working for Latham and Watkins LLP says, Americans who don’t comply with FATCA are deemed “recalcitrant” and income they receive from U.S. sources are subject to a 30 percent withholding tax. To avoid the tax carnage Americans are now renouncing their citizenships with 1,780 passports being surrendered compared to 235 in 2008 as per data obtained from IRS. However, some other banks are seeing a window of opportunity, Royal Bank of Canada, the sixth biggest wealth manager with $ 435 billion under management as on the beginning of 2011, said it sees the opportunity as competition is exiting, including in emerging markets where it is managing more than $ 80 million. http://www.internationalfinancemagazine.com/article/UK-Wealth-Managers-Restrain-Advice-to-US-Millionaires-as-Tax-Evasion-Rule-Looms.html
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