In a report distributed on Wednesday by the Associated Press news agency, Urs Zulauf, deputy chief of the Swiss Financial Market Supervisory Authority, or FINMA, was also quoted as suggesting Swiss financial institutions would be right to avoid taking on US clients, due to the recent crackdown on such institutions as Switzerland’s UBS, and proposed regulations aimed at US tax evaders.
As reported here last week, President Barak Obama on 18 March signed into law a bill which was technically aimed at boosting US employment but which contained major but little-publicised elements that are expected to impact non-US financial institutions, funds and collective investment structures.
The $17.5bn HIRE Act contains an earlier piece of legislation known as the Foreign Account Tax Compliance Act, which in turn evolved out of the Stop Tax Haven Abuse Act of 2007.
In its story, the AP quoted Zulauf as saying that many of the Americans Swiss banks are seeking to avoid as customers in fact have "no tax issues”, but are still considered too risky to keep.
Americans both at home and abroad, “are increasingly struggling to invest with foreign banks”, the AP said, citing offshore US citizens’ groups.
It quotes Andy Sundberg, an American in Geneva who campaigns for fairer treatment of US citizens abroad as saying: "once a bank takes a single American client, it then has to open all its books to the IRS. I can understand their reluctance."
The new regulations are due to take effect on 1 Jan 2013. Many details have yet to be worked out, sources familiar with the legislation say.
