Saturday, June 28, 2014

Banking in a Foreign Country..........Mexico to be Exact! San Miguel de Allende to be even more so.

It started with FBAR a few years ago.  Not sure what year as it didn't impact me.

Most ex-pats that I know continue to do their banking with their US banks.  They have a small bank account in San Miguel for the following reasons:

(1) It was required in order to get a temporary or permanent visa to have a Mexican bank account.  Then a letter from your bank giving the average amount per month in the account along with a copy of the last three months of that account is also required.

(2) Money is not insured in accounts in Mexico so a sharp devaluation just means you lost it.  Having several friends who have had that happen convinced me to keep everything as simple as possible.

(3) Banks in San Miguel (some of them) will pay your utilities and your household help on whatever schedule that is requested.  It is very helpful if you travel a lot or just want to have good records.

FBAR was implemented and required that those foreign residents with more then $10,000 in an account in a foreign country had to report this on a Form with their income tax return.  Penalty for not doing so, $10,000USD!  Most people didn't even know about this law or form as it was not publicized much at all.
Now, those finding out about it, after the fact, are very concerned about being penalized for all the years they didn't file the form.

FATCA has been a different story.  It has been highly publicized not only by the US press and organizations but by seminars held by the banks here in San Miguel!  There has been a steady stream of comments on the Yahoo Civil List (which isn't always that Civil) along with comments at all kinds of venues.  It too requires that if you have a certain amount of money in foreign banks, anywhere in the world, it must be reported on a specific form along with your income tax.  This new law goes into effect on July 1, 2014.

It has caused an uproar because foreign banks are now required to report on each and every expat account.  Banamex closed their US offices.  They also closed the accounts of any foreign citizens in Mexico.

Worldwide financial institutions are reeling with the requirements imposed on them to report all kinds of private information.  For a clearer explanation and ramifications, please read the article on www.AmericansAbroad.org. It is very comprehensive.

Other people here in San Miguel have now received notification from Fidelity Investments that they no longer will handle accounts of ex-pats.  Geez, it's just the tip of the iceberg that is slowly melting.

Of course I suggest that if reading any of this impacts you, discuss it with your accountant, your financial adviser or whoever helps you with this stuff.  I am not impacted by any of the above as my account here in Mexico is minimal to just meet the requirements of Mexican immigration.

Now the latest bombshell to fall upon expats is the announcement a few weeks back that paper checks written outside the USA will not be honored by US banks. Everywhere, not just Mexico  They will require wire transfers or using ATM machines.  I see the solution on this is, if someone in a foreign country needs to deposit a US check in their account in the US to use one of those smart phones.  A friend of mine does just that. The information about the US checks was given to me by the officer at the bank I use here in San Miguel.  That goes into effect on September 1, 2014.  I confirmed it with my US bank.

I've lived by using an ATM machine for fourteen years. My social security is a direct deposit in the USA.  I probably don't write ten checks a year anymore.  If I do it's to someone in the USA that I mail to them.  So, again, this won't impact me that I can foresee.

It is rather disconcerting though to have all of this happening for many people.  Some expats have gone so far as to renounce their US citizenship.  Sad, but true.

What used to be easy for most is now more complicated and costly.  Again, sad but true.

                                 

7 comments:

Pat Walker said...

OMG what's next????????

Babs said...

Pat, I don't even want to wonder about that.
With Mexico changing the income requirements for an expat to live in Mexico, along with the USA stuff, it gets a bit difficult.

ce8d632a-647c-11e3-94d3-000bcdcb2996 said...
This comment has been removed by a blog administrator.
Calypso said...

Freedom is just another word for nothing left to lose. Keep it simple is about all we can strive to do,

Babs said...

Calypso, keeping it simple seems the best way to me! Thanks for commenting........have missed your writing.

Samal Joe said...

I've lived in the Philippines the last three years. Once a month I write myself a check to move money from the U.S. to here. It takes about a month to clear but it's free. It's still working as of this month. Now my institution in the U.S. is a credit union, so maybe that makes some difference?

Babs said...

Thanks for posting Samal Joe. There are NOW some ways to cash a check here. Some banks, if you bank with them, will cash a check for a minimum of $500USD.........
So, someone has found a way around the mess that was going on last year.