US Citizens and Brokerage accounts?

Discussion in 'Forex Brokers' started by chipmunk, Dec 20, 2012.

  1. Hi,

    What are the regulations on US citizens opening foreign forex brokerage accounts? It seems they can no longer do it?

    Why did this change?

    So are U.S. citizens only allowed to open forex accounts from brokers in the USA?

    I presume foreign FX money managers cannot solicit US money?'s getting more and more draconian in the USA? Land of the "free?"
  2. Nanny states are the in thing - people nowadays are apparently incapable of looking after themselves. Europe leads the way there.

    Plus if they do decide to introduce an FTT and apply it to forex, limiting US citizens to domestic accounts makes collection easier.
  3. The restriction is on the foreign brokers (not U.S. citizens)

    The CFTC requires them to accept U.S. regulations and reporting requirements, margin limitations, etc. before they can solicit U.S. clients. Of course they do not want to that. The C.F.T.C also takes the position that just having a web site is "soliciting"

    The CFTC has sued maybe a dozen foreign brokers already and collected fines so all mainstream foreign forex brokers now refuse to accept U.S. clients.
  4. oh right.....^^^ got you.

    Thanks for clearing that up.
  5. Jibes at politicians and bureaucrats aside, I do believe we are on the verge of a new stage of internationalisation / globalisation in which we are moving towards more homogenous regulations governing services (especially).

    This will impact free exchange (and consumption) of services. We have already seen this with the Financial Action Task Force on Money Laundering; if you move funds internationally and happen to be in a place like Thailand which is on the grey list, you have more hoops to jump through. The EU and USA do it with airline safety, and there is an ongoing battle over an EU carbon tax on non-EU airplanes using its airspace. So too the issue of internet gambling websites and US citizens.

    Thus far it seems to be taking the shape of 'you do not have to comply, but if you want to do business in our territory or with our people, you have to follow these rules'.

    At this stage it is proving to be a barrier to the free exchange of services, so expect negotiations and homogenisation in future.

    It will be interesting when China's consumption overtakes the USA and EU and they decide to play the same game.
  6. zdreg


    "FATCA the matter is, expat$ will take a hit


    Last Updated: 3:28 AM, December 16, 2012

    Posted: 10:38 PM, December 15, 2012

    Last week it was reported that the search giant Google legally avoided $2 billion in income taxes worldwide by shifting $9.8 billion into a shell company in Bermuda, which has no corporate income tax.

    But if you’re looking for the deal those big guys got, you can just forget it, thanks to FATCA — like fat cat, except you leave off the last “t” for “Tough luck, pal.”

    FATCA, or the Foreign Account Tax Compliance Act, which takes effect Jan. 1, has the ostensible aim of cracking down on overseas tax havens. FATCA requires foreign banks to report US account holders to the IRS or face financial penalties.

    But as in the case of Google, multinationals have resources to adapt to the law that individuals living overseas can’t hope to match.

    Anecdotal evidence suggests that FATCA is already making financial life difficult for overseas Americans, over and above the possible tax bite. Some smaller banks are rejecting new and canceling old expatriate accounts, rather than spend the money to comply with the law. Mortgages are reportedly being denied or called in.

    “Recent research suggests that the costs for each typical non-US bank to become FATCA-compliant could run to tens of millions of dollars,” says Nigel Green, chief executive of international consultancy deVere Group, which caters to expatriate clients.

    “FATCA will dramatically reduce foreign investment in the US at a time when the economy is teetering on a knife edge,” predicts Green. “All this for the purpose of recovering $1 billion per year, which observers . . . say is only just enough to run the federal government for around two hours.”

    Green says a number of his clients are considering giving up their US citizenship.

    “Let’s say you’ve gone overseas and settled down and met a young lady, so perhaps you’re not going back to America,” he says. “It’s a nice passport,” he says many clients tell him. “But it’s not worth the trouble.”
  7. Yes I agree with those points.

    Europe is currently threatening to prevent U.S. money managers and hedge funds from accepting European clients unless reciprocity is worked out. Of course this is an enormous volume of investment. So odds are that we will eventually have some degree of reciprocity in investment with Europe at least.

    The other thing is, there are still some loopholes. A very few small foreign brokers will still accept U.S. clients.
  8. I think its not so much a loophole but the U.S. authorities not caring that much about a few smalltimers or they just didn't get around to them just yet. Not a loophole, because whats the legal basis of enforcing american regulations/law in an extraterritorial fashion? They simply dont apply out side of american borders. They just strongarm then to comply, or to settle and pay a fine, because they have the reach to do it. I'm sure ending up on the american shitlist is no fun for anyone, especially not in financial services.

    The other question is if you really want to send money to small fx firms in places like BVI and similar.
  9. It isnt very difficult to deal with this if you are a US resident.
    Just form a non-US corporate entity and have that entity open corporate accounts with any non-US broker you want. 100% legal.

    The info on exactly how to do this is all over the net, but you can also get a specific guide from

    Its probably the smartest thing a US based trader can do.
  10. And no need for a $200 ebook which just states the obvious.
    #10     Jan 23, 2013