Many European banks systematically terminate their business relationship with clients after discovering that they qualify as US persons. According to reports, many financial institutions dread the number of regulatory requirements imposed by American tax authorities and securities supervisors. However, the consequences for clients are often serious. Many complain, for example, of difficulties finding a new bank. Many felt forced to give up their US citizenship. We don’t think that is necessary.
The US provides enough leeway for managing the assets of clients considered US persons. We would like to inform you about this issue.
We have observed that financial providers often terminate a business relationship if …
In Liechtenstein and Switzerland, small and large asset managers alike are serving US clients again. In prior years, they systematically terminated their business dealings with US clients. However, the legal situation establishes a framework in which they can successfully serve clients considered US persons. For example, there are currently 63 Swiss asset managers whose US business is so large that they are registered with the Securities and Exchange Commission (SEC). The numbers speak for themselves:
Asset managers in Switzerland and Liechtenstein with a more modest presence on the US market can serve US clients without registering with the SEC. As a custodian bank, we noticed that only a few asset managers know about the opportunities afforded by the Dodd-Frank Act.
In fact, it is possible to serve US clients within clearly defined exemption limits without incurring high administrative costs. We suggest that asset managers check their situation to find out if it is worthwhile to engage in business with US clients. This is especially the case when a client relationship is at risk due to the client’s status as a US person.
According to the exemption limits provided under the Dodd-Frank Act, asset managers are not required to register with the SEC. We believe that the following requirements stipulated by the Act are central:
Located between Austria and Switzerland, banks in the Principality of Liechtenstein have been required to think and operate beyond borders for years now. Liechtenstein maintains a customs and monetary union with Switzerland, and its national currency is the Swiss franc. However, in contrast to Switzerland, Liechtenstein is a member of the European Economic Area (EEA) and thus has direct market access to European countries.
The financial center of Liechtenstein has fundamentally changed in recent years. Thanks to a systematic clean money strategy, the government, supervisory authorities, and market participants brought about its transformation into a modern financial center. Today, Liechtenstein is MiFID II-compliant and has distinguished itself as an “early mover” with respect to the automatic exchange of information (AEOI) of the Organisation for Economic Co-operation and Development (OECD). Futureoriented issues are viewed as an opportunity for the country.
Since 2009, Kaiser Partner Privatbank AG has worked as a custodian bank for non-American asset managers who deal with clients considered US persons. We are recognized as a Qualified Intermediary by the Internal Revenue Service (IRS) and operate within the framework of the Foreign Account Tax Compliance Act (FATCA).
In times of global transparency, we are particularly focused on documenting assets, e.g. for FATCA. We offer standard reporting for assets acquired through stocks and bonds with US persons, which also takes country-specific requirements into account. For clients with more complex requirements, we produce reports that document additional investment products, income from companies, or other special features of assets. To do so, we work with Kaiser Partner Reporting AG as an independent specialist. Their experts provide individual reporting and monitoring strategies upon request.