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Are US ex-pats being told to take their retirement account elsewhere?

Josh Matthews and James Sellon, Managing Partners at MASECO, have both been quoted in a recent article in International Adviser discussing whether US financial institutions are turning away long-standing customer retirement accounts (unless, of course, they are significant size) if the account holder lives outside the US.

One of the reasons for this may be that the banks are becoming increasingly concerned about the ‘know your customer’ (KYC) rules that were first introduced in the US in 2003. The financial institutions that manage the Individual Retirement Accounts (IRAs), Keogh Accounts and 401(k) plans are worried that they unable to ‘know’ their customers if they live outside the US.

Moving these types of accounts can be quite tricky as they are often tied in to tax-related incentives and early encashment penalties.

James Sellon said, “Over the years I have seen a number of senior US compliance officers making decisions to close accounts for non-US residents because of the ‘advice’ issue. I think that this story will build and build, but is at the moment only in its infancy.”

Josh Matthews commented that non-US-based advisers began to get nervous about looking after American expats and others with links to the US in 2008, when the US government pursued UBS whistleblower Bradley Birkenfeld, and eventually sent him to prison – even though the information he had provided had been key to the government’s case against UBS (for helping Americans to evade US tax).

You can read the full article here.

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