HSBC Private Bank has become the latest financial institution to announce that it will no longer provide services to US expats. While the official announcement from HSBC Private Bank was couched in fairly diplomatic terms, it is obvious (to me at least) that this is a direct response to proposed disclosure rules and the consequential regulatory burden and potentially draconian penalties associated with doing business with HNWIs who also happen to be US expats.
In short form, the new rules which take effect on 30 June next year will not only make the banks responsible for non-disclosure by their US clients but require the banks to prove their innocence to avoid those penalties. Leaving aside the absolutely inappropriate shift in responsibility onto the banks and the very improper extrateratorial effect of the new regulations, it's worth noting that there were much easier and less costly ways of achieving the same objective (of identifying tax evasion by US persons).
Note: edited to clarify that the announcement relates to HSBC Private Bank, not HSBC as a whole
HSBC is not the only financial intermediary that will not accept US clients outside the US - it is now common to see account opening documents and investment subscription forms contain declarations that the investor is not a US person.
4 comments:
For greater accuracy you should change "HSBC" to "HSBC Private Bank" - it only affects "several hundred" people and not all Americans in HK
Personally I think the way the US gov and IRS insist on applying their laws and rules outside their own country is quite disturbing.
You're correct - the press release did limit this to HSBC Private Bank. Thanks for point that out. I will amend the post.
In terms of impact, it remains to be seen how wide spread the imapct will be. I am already aware of some intermediaries which have decided that they will not accept US clients.
The U.S. is doing economically what the Nazi could only dream about. I can only hope for its complete collapse.
While I agree that the US (among others) seems hell bent on destroying its economy and the living standard of its people, it's not something I would wish to see happen to anyone. Even if I only looked at it from a personal self interest perspective, the rest of us would be a lot worse off in the event of a complete collapse of the US economy.
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