Citibank Mysteriously Shutters Accounts in the UK for Those Without US Addresses

Citibank Mysteriously Shutters Accounts in the UK for Those Without US Addresses
June 3, 2019

In 2019, American Expat Financial News Journal reported that Citibank (now known as Citi) ceased service for an undisclosed number of accounts for some of their account holders who live in certain countries overseas. Why is Citibank closing foreign accounts? Find out what expats need to know about this cryptic, foreboding news and what it has to do with filing FATCA.

What Happened, Exactly?

In 2019, Citi closed a small amount of US credit card holders’ accounts for those with mailing addresses in specific countries. Citi stated that local regulatory requirements are preventing them from maintaining these accounts. The Citi representative said that US credit card holders who live in the UK or other countries where service is being discontinued would be able to keep their accounts if they were able to provide the bank with a US mailing address within 90 days.

Some of the accounts that Citi chose to close are notably held by people who are not American citizens, which means that expats are not specifically the target. But, this information is still disconcerting to expats for obvious reasons, as banking has historically been a pain point of moving abroad. Regardless of whether expats are the target or banks are trying to avoid filing FATCA, expats will be disproportionately affected when banks make these kinds of decisions. And, for some expats who remember this scenario from a few years prior, it can feel like history is repeating itself.

Filing FATCA: Making Expats’ Lives More Complicated Since 2010

Speculating about why Citi made their decision may not be helpful, but it’s nearly impossible to avoid. Headlines like the one created by Citi make expats nervous – and for good reason. Ever since the enactment of FATCA (Foreign Account Tax Compliance Act) in 2010, banking has been particularly difficult for expats. FATCA is an asset-based reporting requirement for Americans living abroad that is satisfied when taxpayers who meet the asset threshold file Form 8938 alongside their Federal Tax Return.

The threshold for triggering a filing requirement is if the total asset value exceeds $200,000 on the last day of the tax year, or more than $300,000 at any time during the year for unmarried individuals or those who are married filing singly. For married individuals, the threshold is met if the total value of assets more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year. The penalties are up to $10,000 for failure to disclose and an additional $10,000 for each 30-day period of non-filing for a potential maximum penalty of $60,000. Criminal penalties may also apply.

If you’re new to filing FATCA and the far-reaching implications it has for expats, there are many great articles that define the issues clearly. But as steep of consequences as expats face for not filing FATCA, the penalties that banks face are so severe that many of them no longer wish to work with Americans. This has dire financial effects for expats who need to bank abroad and frustrates expats around the globe.

Do You Have Questions About Filing FATCA?

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