Why Mexican Banks are closing bank accounts held by Americans?

 By Yann Kostic from the July 2014 Edition

Well, let’s start at the beginning: if you are a U.S. citizen (or a green card holder) and have more than US$10.000 in foreign financial accounts at any time during the year, you must file an FBAR (Foreign Bank and Financial Accounts Report). The reporting of foreign financial accounts for the prior tax year must be filed by June 30, and there is no extension.

The account(s) must be reported when there is a financial interest or when there is signature authority over the account; even if it produces no income or there are no distributions from the account.

As of January 1st 2014, reporting is required by the Bank Secrecy Act (BSA) with the proper form being submitted to Treasury’s Financial Crimes Enforcement Network (FinCEN), not with your tax return. Foreign accounts must be reported on FinCEN Form 114, which is only available on line (on the BSA E- Filing System website) . Form TD F 90-22.1 is no longer valid or accepted. The June 30 deadline is firm; there is no extension for filing the form late.

Furthermore, you can now have a tax professional (i.e. CPA or enrolled agent) to file on your behalf, by designating them an agent on BSA Form 114a. While each individual must file an FBAR, a couple can complete the same Form 114a, to authorize one spouse to file for the other (only one signature is authorized per FBAR). That is if all their accounts are jointly owned. Also, a person with a power of attorney over a foreign account must file an FBAR, even if the person never exercises the power of attorney.

In order to make sure expats are complying, the IRS is forcing foreign banks all over the world to report Foreign Accounts held by Americans (and green card holders) under the threat of terminating their U.S. Banking Licenses, if they do not comply. The IRS will then compare the data send by foreign banks and verify if you filed your Foreign Account reports.

This is the reason why your local Mexican banks are closing bank accounts held by Americans as some of them they are not willing to deal with the IRS and their requirements for U.S. clients. Mexican banks will likely continue to close US Citizens accounts since banks have until the end of the year to comply. By the way, this is also the reason why, a skyrocketing number of Americans have been and are renouncing their US citizenship.

Recently, a number of seminars have been held in various Jalisco and Colima locations by individuals and entities claiming to have so called “strategies” to resolve this issues and pushing you (or should I say scaring you) to act immediately due to the June 30th hard deadline.

A BIG WARNING: Be extraordinarily careful, as some of these so called “strategies” will get you in a whole lot of very serious and costly troubles (the fines are brutal).

These sets of FATCA (Foreign Account Tax Compliance Act) laws are evolving and will continue to evolve. If you are not sure of where you stand, get a second opinion, a third one, from a real professional (a CPA, an EA or a Financial Adviser), depending on your particular situation, there are options available to you. Remember that it is one of these times when procrastination will not pay off.

Yann Kostic is a Financial Advisor (RIA) and Money Manager with Atlantis Wealth Management, specializing in retirees (or soon to be), self-reliant women and Expats in Mexico. Yann works with TD Ameritrade Institutional (custodian). He splits his time between Florida and Ajijic/Manzanillo in Mexico. Comments, questions or to request his Newsletter “News You Can Use”. Contact him at Yannk@AtlantisWealth.com, in Mexico: (376) 106-1613 or in the US: (321) 574-1529.

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