Are you ready for FATCA?

A major US investment bank was famously described as 'a great vampire squid wrapped around the face of humanity' but we would say that this description much better fits the US government. The recently enacted 'Foreign Account Tax Compliance Act' is another step back into the time when a citizen was treated more like the property of the ruler and could be taxed at will. Other countries would be well advised to prohibit their institutions from passing on any information to authorities in a foreign country. The whole idea of sovereignty of states is at stake when one country is allowed to apply its laws in other jurisdictions. If the US wants to make sure that it's citizens are complying to all tax laws the authorities are well within their rights to close the borders for capital leaving the country. From a practical point of view, FATCA means that investors have to take even greater care when selecting a financial advisor. Non-US investors are also in danger of being compromised by information flowing too easily from a compliant bank or money manager to the US authorities.