Americans Helping Americans Abroad

The Overall Picture

American citizens resident overseas, and many others with links to the United States, have experienced a variety of problems maintaining access to the financial system. They have encountered problems both in the United States and where they live and work.

Laws and regulations

There appear to be no laws or regulations explicitly precluding access to financial accounts for what are known as “US persons”, i.e. both US residents and non-resident citizens. However, financial institutions have been targeted with new laws, regulations and enforcement efforts in the name of fighting international tax evasion and money laundering. They have also had to adjust to regulatory changes aimed at assuring financial stability and protecting investors. In this context many have taken “business decisions” restricting their relationships with US persons or cutting them off altogether. In many cases accounts that have been retained are subject to punitive tax regimes and reporting requirements.

While not a comprehensive list, five sets of laws stand out as the legal basis for what has happened:

  1. The Bank Secrecy Act of 1970 which required US persons to report financial accounts held outside the US that in aggregate exceed $10,000 to the US Treasury (these reports, FINCEN 114s, are widely known as FBARs).
  2. The Tax Reform Act of 1986 created rules that applied punitive tax and reporting regimes to “passive foreign investment companies” (PFICs), which include most collective investment vehicles (e.g. mutual funds). Their purpose was to prevent taxpayers from avoiding current taxation or converting ordinary income to capital gains.
  3. The Patriot Act of 2001, which strengthened know-your-customer requirements (KYC) and their enforcement.
  4. The HIRE Act of 2010 included several provisions, among them the Foreign Account Tax Compliance Act (FATCA), promising reduced international tax evasion. FATCA provided budgetary offsets to expenditures that were otherwise unrelated.
  5. For residents of the European Union, various EU Directives designed to create a comprehensive supervisory framework for collective investments in the European Union. These are known as UCITS (1985, 5th version came into effect in 2016), which regulates collective investments; MIFID (implemented in 2007, a 2nd version will be effective in 2018), which regulates brokers and other financial service providers who may hold such investments in custody for their clients; and the AIFMD (2011, implementation still incomplete but by 2014 it was in effect in the largest countries), which regulates fund managers not covered by UCITS.

It is worth noting that we have heard criticisms of the US Dodd-Frank Act of 2010 but we cannot identify any of its provisions that contribute to problems of access to the system.

Pressure applied to financial institutions

Regulatory pressure on US banks has been building since September 11 and, especially, since the 2008/9 financial crisis. What is new is the intense pressure on non-US financial institutions since the passage of FATCA in 2010 that US authorities have applied by threatening large fines or withholding taxes. These would make it impossible for a financial institution deemed “non-compliant” to operate, giving it little choice but to adapt. As of June 1, 2017 more than 288,000 financial institutions worldwide had acquired a Global Intermediary Identification Number (GIIN) from IRS, certifying their FATCA compliance.

The case of Zweiplus, a small Swiss bank formed in 2008 with around 250,000 accounts, is illustrative. The Department of Justice and Zweiplus signed a Non-prosecution Agreement in 2015 under whose terms Zweiplus  acknowledged “conduct”, but not crimes, listed in paragraph 17 and paid a “penalty” of around $1.1 million “in lieu of restitution, forfeiture or criminal fine”. The main cited offense was eight checks totalling $33 000 “ordered” [sic] by a single “numbered” account holder. Two features of this agreement stand out: (i) the use of penalties that seem disproportionate in order to enforce US laws on an extra-territorial basis without any kind of legal process; and (ii) the DOJ’s endorsement of Zweiplus’ explicit policy of systematically denying service to US persons even when fully compliant with all (i.e. both Swiss and US) laws.

Adverse consequences for expatriate Americans

Bank executives have rarely been forthcoming about their reasons for their decisions, i.e. which pressures motivate decisions in specific cases. But the overall result has been three broad classes of problems encountered by overseas Americans’ trying to access financial accounts:

  • Both individuals and small businesses have been cut off from basic banking services, i.e. access to the payments system and the ability to obtain credit, in both the United States and abroad. Typical (redacted) rejection letters are attached: (ANB Bank) (ANB Bank 2); (AXA Banque) (AXA Banque 2) ; (ING Direct) (ING Direct 2) ; (Bourse Direct).
  • People have suffered punitive treatment of non-US savings vehicles and retirement accounts by IRS, which now designates many such vehicles as “foreign trusts” or similar. In particular, FATCA and related provisions of the HIRE Act reinforcing earlier, but rarely enforced, legislation relating to PFICs make it prohibitive for most Americans to own: (i) non-US mutual funds; (ii) other collective investment vehicles (e.g. life assurance in France); or (iii) tax-deferred savings vehicles similar to IRAs or 401(k)s that form the basis of defined contribution pension plans. This has put many, if not most, such investments off-limits for Americans, both resident and non-resident, and created a captive market for the US industry. See also for an Australian discussion of US tax treatment of non-US superannuation schemes.

Access to similar vehicles in the United States has also been restricted or denied. For US residents of the European Union, where collective investments are regulated under UCITS, this is compounded by the AIFMD and MIFID. These appear to have an extra-territorial reach. In principle, “passively” marketed investments (where all communication takes place in the United States, is at the initiative of the investor if resident in Europe, and involves no activity by fund managers or service providers in the European Union), should not be restricted. In practice, especially where financial institutions separately offer products or services in the European Union which makes them subject to AIFMD and MIFID, they may be unwilling to distinguish “passively” acquired clients from the rest (or fear that EU regulators will not do so).  The result is that many US funds are not available to residents of Europe. In some cases brokers have cited EU regulation as justification for complete brokerage account closures (See here and here); (another example here).

  • “Accidental” Americans face especially serious problems. These are non-US residents whose only link to the United States is the nationality of one or both parents or the fact that they were born and perhaps spent part of their childhood there. They are numerous, especially in Canada where the nearest maternity facilities in some areas have been in the United States. US citizen-based-taxation causes serious difficulties for such people in the global context where taxation is almost universally residence-based. Once an Accidental’s US link is recognized by his or her bank – it is common in many places to provide your place of birth when opening a financial account – FATCA requires the bank to ask for and obtain a W-9 IRS form. This must be filled out with US tax identification number (TIN, usually a social security number) or a certificate of renunciation of citizenship. Since Accidentals generally do not consider themselves American, most have never obtained a TIN (or are unaware of having done so). Nor have they ever done anything to ensure compliance with any US-required tax or financial account reporting. Obtaining a TIN or formally renouncing is usually possible but requires “coming into compliance” and is time-consuming. Since professional assistance is needed, the process is usually expensive even if no taxes are claimed by IRS. Until the Accidental comes into compliance he or she is at least delinquent, and possibly criminal, in the eyes of the United States. Some are concerned that they will be targeted by the US Treasury.

Compensating adjustments and corrective responses

Some positive adjustments and responses in the market place have occurred. Several “asset managers” and “financial advisors” have emerged willing and able to assure financial institutions in the United States that they can comply with know-your-customer rules while offering savings vehicles to non-resident Americans. These vehicles do not avoid the restrictions the AIFMD imposes on access to mutual funds for Americans resident in Europe but ETFs and structured portfolios of individual stocks are generally permitted. Normally these accounts include at least some basic banking facilities. The problems with vehicles offered by these advisors and managers are price and accessibility. They usually have significant thresholds for portfolio size ($1 million is a representative minimum but there is often considerable flexibility) and entail high fees, of the order of 1% of assets under management. It is easy to pay something of the order of $5,000-10,000 per year to maintain a very-low-activity account.

Membership in the American Consumer Council, which is available to US citizens who make any of a wide range of ordinary expenditures in the United States, provides access to credit union accounts. These offer limited services but provide basic access to the payments system.

In the European Union, a directive ensuring residents access to basic bank accounts regardless of citizenship (2014/92/EU) is now in force, and once it is fully implemented, the problem of access to basic local banking services in Europe could largely be solved for Americans with a TIN.

Solutions for Accidental Americans are still not available. In France this has contributed to a broader reaction against the extra-territorial reach of much US law and regulation, reflected in a report on this subject prepared by Pierre Lellouche for the National Assembly. We have translated the passages addressing the specific problems of Accidental Americans and options for addressing them.

In Canada, these issues led to the creation of the Isaac Brock Society,, which serves as a clearing house and an archive for disseminating and exchanging information and commentary of interest to US-Canadian dual nationals. In Australia Dr. Karen Alpert has created the website

In the United States a law suit was filed challenging the constitutionality of FATCA, the Inter-governmental Agreements that have been negotiated to implement it, financial account reporting requirements and associated penalties in view of their “unique and discriminatory burdens on US citizens living abroad”. This has been dismissed and the decision affirmed by the 6th Circuit of Appeals in August 2017. Plaintiffs were deemed to have no standing to bring their case on the grounds that they suffered no harm traceable to FATCA. The case will be appealed to the Supreme Court.

What has been the impact on expatriate Americans?

Systematic and comprehensive information about how people facing restrictions or being cut off from access to the financial system have coped is not available. Some have found ways to adapt, sometimes at considerable expense, while others struggle. Two good efforts to take stock of what has happened are:

Finally, the Wikipedia entry for FATCA is very useful. While Wikipedia entries are not authoritative, may not be well-edited and need to be used with caution, this one provides a great deal of useful information, particularly its citations and links to references.


American expatriates who have experienced problems with access to the financial system are a heterogeneous group whose circumstances and problems vary greatly. They are not generally wealthy and in most cases their problems are unrelated to their personal tax situations. Some representative cases, many self-reported and their sources noted but unverified by AARO, are provided here:

Banking services: Access to the payments system and bank credit have been issues at both household and small business levels. The cases here illustrate the difficulties that FATCA creates for families and for business relationships: Daniel and Lois Kuettel; Donna-Lane Nelson and Richard Adams; L. Marc Zell. (Source: excerpted from FATCA lawsuit).

Savings vehicles: The most severe cases concern long-term expatriates, in some cases going out of their way to be compliant, whose (non-US) retirement plans and, in some cases, real estate investments are treated differently by IRS and their local tax authorities (see, especially the stories of “Shaun”, “Susan”, “Don”, and “Gramps” [source: Dr. Karen Alpert]; and Jonathan, source Patricia Moon at, search “fatca related suicide”]).

Numerous US brokerages have refused new, and restricted or suppressed existing, accounts of European residents. AARO has been provided with multiple copies of a form letter sent by Ileana Musa, Head of Global Client Segment and Strategy of Merrill Lynch, the largest retail broker, in 2016 to clients informing them of a client dump. Circumstances of the clients and their reasons for being in Europe are varied: at least one plans to return home, another is not mentally competent to manage the forced change. We are not sure what solutions these people have found, if any. In a similar case (see “Susan”, cited  above), a 401(k) account was reportedly liquidated and a check forwarded to its owner because her broker failed to pay for postage to deliver the notice before the broker’s 30-day deadline for rolling it over had passed.

Accidental Americans: Fabien Lehagre was born in California but left at age 18 months with his French father for France where he has spent his life. He never again saw his mother or visited the United States until, traveling on a French passport, he was 27. He speaks no English. He was informed by his bank in 2014 that he had to come into conformity with FATCA. Fabien has reported his experience in some detail and created the Association des Americains Accidentels in France to press for redress for all people in his situation and calling attention to the abuses that arise with citizen-based taxation. His efforts are recognized in the Lellouche report cited above.

Jude Ryan was deported from the US with his French mother when he was five. At birth his parents obtained a US passport for him which he used, mainly in Europe, until he obtained French nationality papers. At this point he was advised that he had lost US nationality and never used or renewed his US passport again. US customs recognized him as French by issuing him a tourist visa. However, when he was 40 he was identified by his bank as having US “indicia” and FATCA problems began. In response he began a “Virtual Hunger Strike” ( which involved sending the White House nearly daily emails in which he summarized Accidentals’ situations and communicated a number of case stories. Some of these are available here, with a summary of the stories here.

Professor Allison Christians of McGill University has analysed the problem of Accidentals and its legal context in some depth. She uses a composite she calls “Tina” to discuss the issues and the abuses that have occurred in order to respect victims’ privacy. (SSRN paper by Allison Christians)

Other: There are numerous cases of expatriate Americans or US residents with overseas links unaware of filing or reporting obligations or who committed oversights or errors, in many cases while relying reasonably and in good faith on tax professionals. Many have met with financial disaster due to penalties and fines, especially related to FBARs, far out of proportion to any alleged tax delinquency. Two such cases: Milo and Lois; and Patricia (more here).


Six priorities stand out for Americans resident overseas in the area of access to financial services. Positive action is most urgent for numbers 4 and 3.

  1. To assure access to basic banking services on a non-discriminatory basis where they work and live. In most of the European Union this should substantially be achieved following the implementation of directive 2014/92/EU.
  2. To assure access to basic banking services on a non-discriminatory basis in the United States. French law ensuring that French nationals as well as residents have a right to basic banking services provides a good model that the United States should emulate. If necessary, the Banque de France designates a bank to offer basic services. The Federal Reserve or OCC could do the same.
  3. To assure access to savings vehicles, including IRAs and other tax-sheltered retirement accounts, on a non-discriminatory basis. This is a matter of both (i) being able to open and use new accounts (i.e. building savings); and (ii) having the right to warehouse assets in existing accounts pending later use (i.e. drawing on them). Protectionist provisions of the tax code that create a captive market for the US funds management industry by penalizing savings held elsewhere should be repealed. These relate notably to PFICs and retirement plans, often obligatory or at least encouraged by the host government, deemed by IRS or the US tax code to be “foreign trusts”. Foreign regulation should not be an acceptable justification for closing Americans’ US accounts. In particular, liquidation of, and threats to liquidate, US-based tax-sheltered accounts accumulated over time or other assets with unrealized gains, implying major tax consequences, should be forbidden where the reason is that (i) a client’s personal situation has changed or (ii) a financial institution does not like regulatory changes. Where necessary, financial institutions offering asset custody services, including management of IRAs, can be designated to make their services available to non-resident Americans.
  4. To decriminalize Accidental Americans and give them a low-cost option of being treated as non-resident aliens. The Treasury is aware of the problems that Accidentals face and has proposed legal changes (in the 2016 Green Book) to provide some relief. These would have elements of the amnesty that advocates for Accidentals such as Lehagre and Ryan have been seeking, notably by eliminating the mark-to-market exit tax which for many Accidentals is a prohibitive obstacle to formal renunciation. Some restrictive conditions remain, however, especially relating to passports, and the renunciation fee still appears to be required. So far no action has been taken.
  5. To consolidate FATCA and FBAR reporting obligations for individuals into a single simple filing included in tax returns. Given FATCA requirements on financial institutions it is not clear why individual filings are required at all. At most there should be a single filing which can be shared between the different parts of the Treasury (IRS, FINCEN). The threshold for filing should reflect either current FATCA rules or the FBAR threshold adjusted for inflation since 1970.
  6. To bring excessive fines and penalties for reporting errors, oversights or mistakes into reasonable proportion to the offense.