Swiss banks closing US accounts

Swiss bankers say they are restricting or denying service to "the few American clients" they have because compliance with new U.S. tax law is cost-prohibitive. The Foreign Account Tax Compliance Act, passed in 2009 and to be phased in over the next several years, has made working with U.S. clients "evermore elaborate," said a spokesman from the bank Postfinance. "It's simply not economical to maintain a team of experts to ensure compliance for the few American clients that we have," the spokesman said. The Wall Street Journal reported Saturday that expatriates in Switzerland are having trouble finding financial services and some banks are telling their U.S. clients to take their business elsewhere. Scott Schmith, 50, a photographer living in Switzerland, said the new law that prompted his bank to request he close out his account "was the straw that broke the camel's back." Instead, Schmith applied for Swiss citizenship and turned in his U.S. passport. "I have nothing to hide, but my heart is here, my business is here, and my life is here," Schmith told the Journal. U.S. officials said those wishing to disclaim their U.S. citizenship must prove they have been in compliance with tax laws for five years before they renounce. Otherwise, authorities can cancel revoke the permission to renounce citizenship. "In practice, people shouldn't assume they'll never have to deal with the United States again," said Scott Michel, an attorney in Washington. "Foreign tax evasion is a drain on the federal budget worth tens of billions of dollars, and it puts an unfair burden on law-abiding American taxpayers to fill that gap," said an aide to Sen. Max Baucus, D-Mont, the Senate Finance Committee chairman and sponsor of the bill known as Fatca. Finance business groups such as the European Banking Federation and the British Bankers' Association are working with the IRS and other U.S. agencies to straighten out details on the law's implementation that have yet to be fine-tuned. In the meantime, banks are claiming the regulations are too expensive and breaking the law risky. "High costs stemming from implementing additional controls and ensuring compliance just don't make sense for us," said a spokesman for Walliser Kantonalbank.