FATCA, CAPITAL CONTROLS, AND HOW TO PROTECT YOURSELF

FATCA

 

 

CONTRIBUTED BY THE SILVER CONTRARIAN

 

Imagine you were a fisherman living on a lake. On that lake you made your living but there was a cabal of pirates with big boats and lots of guns that claimed the lake for themselves. They allow you to live and fish there but require that you in turn must pay them anywhere from 3 to 5 out of every 10 fish you catch.  Their claim to your labor is that they are providing you the lake on which you fish and protecting you from any harm that may come your way while on the lake.  To make sure you pay them they will sink your boat and confiscate all your belongings if you don’t comply, even killing you in the process should you resist their efforts.
 
 Now let’s say you grow tired of the arrangement and choose to free yourself from their control. You move to another neighboring lake with it’s own pirates, but these pirates you find to be less intrusive and offensive. Then one day you get told you have to report the fish you catch from the new lake to the same cabal that you had previously escaped from. They say you don’t have to pay anything unless you happen to make a really large catch, they just want to make sure you report back to them. After all, you owe them since you originally learned to fish on their lake, right? So you don’t want trouble, you report your catches and go on with your life. Then one day, you get news that they are checking with the vendors in the markets that you sell your fish to, making sure you’re reporting every single fish you’ve caught. To make matters even worse, when you go to sell your fish they now are requiring that you disclose all your fishing equipment, boats, and anything else of value that you possess in your new lake home. So where’s this really headed? They say they just want to make sure you aren’t cheating them.Do you really expect them to stop there? Why would they ask you to list all you own if they tell you that they aren’t going to confiscate or tax it somehow?
 
This story of the fisherman has now become reality for Americans living overseas or any American with money in any foreign financial institution. The US is one of two countries in the world that taxes it’s citizens based on citizenship rather than residency,expecting citizens to file taxes whether or not they are actually living in the country.  Now, with the implementation of FATCA (Foreign Account Tax Compliance Act) Americans are not just expected to file taxes, but to also fill out a separate form detailing all their foreign held financial assets and bank accounts – if they combine to be worth over 10,000 dollars.  Additionally, this new law requires all foreign financial institutions and banks to report to the IRS on the holdings of any US clients or face a 30% penalty or tax on all transactions to and from any US institutions. As a result, many banking and financial institutions now refuse to offer service to American clients and have even dropped their long time customers that were US citizens. Another result of this law is that many American entrepreneurs and businessmen find it harder and harder to find willing business partners for fear of penalties incurred from FATCA.
 
It would be naive to believe the US government will stop with FATCA. Once the US has all the assets on file for all its overseas citizens, what will they will do with it? Are they just going to sit on this information? That seems doubtful. Likely there will come a day when citizens have to pay property taxes on property outside the US, or a tax on all assets outside the country, or any other number of schemes. The US (and Western Europe) is so indebted, so bankrupt, every conceivable trick in the book will be pulled out to separate man from the fruits of his labor. FATCA is just the beginning.
 
Owe taxes and lose your right to travel freely. This is currently in the works. If the federal highway funding bill, being proposed in congress passes, then the IRS will have the power to revoke citizens passports on suspicion of overdue taxes. According to language in the bill they don’t have to actually charge you with a crime, they only need to accuse you to do this, regardless of your geographic location. You could be in any airport in the world and have your passport confiscated by customs. Never mind that this part of the bill  has nothing to do with funding highways, and this is the 3rd time such a provision has been snuck into highway funding bills (the previous two didn’t pass).
 
Recently the state department has made it more expensive to renounce citizenship for US citizens, with the “fee” to just fill out the form to requests to renounce citizenship going from $450 to $2,350. What if you can’t afford to pay that much? And what’s to stop them from raising it even further one day? This also ties in directly with FATCA as record amounts of US citizens abroad have been renouncing citizenship as a direct result of the law. The government is essentially saying that if you want your freedom you better pay for it or you remain their tax livestock. American citizenship, once thought of as a privilege seems to be becoming more and more a burden. As economist Peter Schiff has stated “ American citizenship is the new herpes, once you have it you can never get rid of it.”
 
FATCA has also set the tone for Europe and the rest of the broke western countries. The Organization for Economic Cooperation and Development (OECD) is now coming up with the blueprint to create a shared pool of financial information on all foreigners. It would require brokers,insurers, and investment funds to report on account balances,interest, dividends among other financial earnings to their governments. Any country within the group could look up any tax paying citizen’s information that a member country had, within the pool. So far 41 of the countries in the OECD have shown support for the blueprint. Additionally the International Monetary Fund,  European Commission, and European Central bank are pressuring any country they consider a tax haven and harassing them. They threaten countries that aren’t reporting it’s foreigners finances with being kicked out of the SWIFTS payment system just as they have with Russia and Iran in sanctions. This would essentially kick those countries out of the global financial system.
 
The good news is that there are those out there fighting back against FATCA. There is the AARO (Association of Americans Resident Overseas), which is going on tour internationally to build support against FATCA. However, it would be naive to expect the system that takes away your freedoms and privacy to just hand it right back over.It’s never a good idea to wait for someone else to save you. Ultimately it is in the hands of the individual to empower and protect themselves.
 
So what can you do? There are a few things one may do to protect themselves.  While it does take some considerable work and might seem unnecessary at the moment, getting a second passport is a great way to maintain one’s personal sovereignty There are more economically free places in the world that offer foreigners a chance to reside in their countries. Countries like Estonia creating “ electronic residency”, or Panama, which has programs where one can attain citizenship thru investing or having a rare job skill that is in need. Obtaining a second passport or citizenship will be easy now compared to what it will likely be in the future. Other countries and groups like the OECD will likely continue to bully countries offering freer economic conditions since they would be direct competition to OECD member countries. Those countries offering economic freedom will more than likely only leave their gates open so long. Getting that second passport can be done for now, but tomorrow is anybody’s guess.
 
Another tip is to keep your finances out of the banking system to begin with. Zero or near zero interest is a losing situation when you consider inflation is higher than the interest rate received on a bank account today.Also what you don’t have in the bank can’t be reported for FATCA ( nor can it be confiscated via bail ins like in Cyprus). Of course you may need a bit of cash in an account but only enough to pay a month or two of bills. So what should one do with their wealth? Holding cash only isn’t a solid plan.  This is where having a decent amount of precious metals can be ideal. Gold and Silver provide the greatest form of privacy and are hard to be traced or reported. If you decide to do invest in precious metals, check the tax reporting laws to know what are the safe amounts you can buy with no required reporting. Certain forms of gold ( certain government minted gold coins) also aren’t reported when sold, or only in certain larger quantities. Traveling internationally with precious metals can be tricky though, so it may be a good idea to buy the metals in the country you would likely get alternative citizenship or residency in, and store them there. 
 
Another good resource we have today are crypto currencies. This makes traveling with wealth very easy and private but the crypto currencies are susceptible to market volatility and can go up or down. You also have to make sure you keep your purchases private as exposing one purchase can reveal who you are on every transaction thereafter. Conceivably a very good way to buy precious metals and maintain one’s privacy would be to travel with bitcoin or other crypto currency to your desired international location and convert the cryptos into precious metals. This could be done directly or by converting the crypto to the local currency and then purchasing your metals. 
 
These suggestions may not work for everyone so look into every option available and do your own homework before taking any action. There is no investment without risk. If you see the writing on the wall and do nothing then expect to end up with nothing.Governments around the world are clamping down harder and harder on capital. Don’t let them trap you in the financial Berlin Wall they are erecting. 

The Silver Contrarian
Independent Man, Ex-pat & Precious Metals Advocate

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