A discrimination complaint that more than 300 accidental Americans first filed in 2019 against France's online banks has at last been given the official go-ahead, in the form of the opening of a judicial investigation, according to accidental Americans in France, and French media reports.
The accidental Americans allege that the French banks are discriminating against U.S. citizens by refusing to accept applications from them, exclusively on the basis of their U.S. nationality.
The French banks, like many other banks elsewhere around the world – including the overseas operations of certain U.S. banks – have said that they cannot afford to accept American clients outside of the U.S., as a result of the 2010 U.S. tax evasion-prevention law known as the Foreign Account Tax Compliance Act (FATCA).
In a statement to the press, the lawyer involved in bringing the case, Antoine Vey, of Vey & Associés, Paris, said FATCA has resulted in "discriminatory practices" taking place, as banks try to avoid having to introduce the comprehensive reporting regime to their businesses that the legislation requires.
As a result, accidental Americans living in France, he added, have endured "disappointment" as they've struggled to open bank accounts in the country, or carry out such other routine banking operations as taking out loans or mortgages.
The goal of the accidental Americans' complaint, Vey said, was to bring an end to this discrimination, for the American expats living in France as well as the estimated 40,000 "accidental Americans" who also live in the country. Accidentals are French citizens whom the U.S. considers to be American citizens as well, typically because they were born in the U.S. to one or more French parents before returning to France.
Because the U.S., unlike all other countries apart from Eritrea, taxes its citizens on the basis of their citizenship rather than residence (so-called citizenship-based taxation, or CBT), such "accidentals" are obliged to file tax returns every year that their income is above a certain amount, and otherwise have U.S. tax obligations, such as the payment of certain taxes, such as on the sale of their home, if this isn't taxed in the country where they live.
Initial complaint in March, 2019
As reported, the accidental Americans filed their initial complaint against "several online banks" on March 27, 2019 with the Paris Public Prosecutor. Among these banks, a press statement issued at the time said, were Boursorama (a division of the Société Générale Group) and ING Direct.
The accidental Americans followed this up in July of 2020 with a second complaint, a civil action by some 278 plaintiffs this time, on grounds that the court had failed to pursue its initial action. It is this that has led to last Thursday's announcement of the opening of a judicial investigation into the matter.
At this point there just 75 accidentals still party to the action, according to Fabien Lehagre, founder and president of the Paris-based Association of Accidental Americans, which all 75 plaintiffs are said to be members of, although the AAA isn't itself a plaintiff, or involved in the matter.
violation of French law
At issue, the accidental Americans say, is the fact that by not allowing them to open the online accounts in question, the banks were and are actively discriminating against "accidentals" and other American citizens resident in France, which, they point out, is a violation of French law.
The banks argue that the costs of complying with FATCA are too high, and that they would have to charge all their account-holders higher fees if they were to accept Americans as clients. For online banks, which seek to keep fees low, this is seen as more of an issue than for some other banking services and products.
Around seven months after the French accidental Americans filed that lawsuit, the Association of Accidental Americans (AAA) went public with its criticism of a then-new French television advertisement (pictured left), featuring the American film star Brad Pitt, which showed him appearing to make use of an account card issued by Boursorama, which – the AAA noted, technically wouldn't actually have accepted Pitt as an account-holder because of the fact that he was a U.S. citizen. (The advertisement is no longer viewable online.)
The issue of American citizens being refused bank accounts in Europe became increasingly heated towards the end of 2019, because of the approaching end, on Dec. 31 of that year, of a moritorium that had been in force on the need for banks to provide U.S. officials with their U.S. clients' Social Security Numbers or TINs.
Since that time, banks across Europe have been ramping up their efforts to get their American account-holders to provide the necessary U.S. TINs for them to provide the client information to the U.S. that FATCA obliges them to, and beginning to close the accounts of those individuals who fail to come forward with their TINs.
The problem isn't limited to France. As reported within the past week, a Dutch financial arbitration body known as KiFiD has ruled that a local banking operation of Dutch financial services giant Aegon was within its rights to close the savings account of one of its clients who has dual American and Dutch citizenship, because it did so as part of a larger business decision to close the part of its Dutch business in which the account was held to all of its clients in that operation.
And while the client might have wished to continue to keep his savings with Aegon Bank, KiFiD said, the bank was also within its rights to choose not to accept any American citizen clients outside of the U.S. going forward, on the basis that, owing to FATCA, the bank could now decide, if it wished to, that it would be "unreasonably onerous," for business reasons, to do otherwise.
In August, a UK-based wealth platform known as Nutmeg was reported to be closing its doors to American clients, ahead of its being acquired by U.S. banking giant JPMorgan Chase, which was said to regard Nutmeg as its best way of accessing the UK's online banking market.
Even U.S. financial giant Goldman Sachs has yet to accept Americans resident outside of the U.S. into its UK-based Marcus operation, which currently is being marketed outside of the U.S. only in Britain.
A survey carried out in October and November 2020 by the Paris-based Association of Americans Resident Overseas found that 40% of the more than 400 U.S. expats who participated reported having had a U.S. bank refuse their business while living abroad.
One even reported receiving a check (for the amount in their account) without warning in the mail, while another said they had a U.S. bank close their account in spite of their having been with the bank for 25 years.
De Volksbank: will accept American
expats...if they meet FATCA requirements
One case that has bucked the trend towards allowing banks to get rid of their American clients and refuse to take on any new ones is that of Ronald Ariës, a retired KLM pilot, who was born in the U.S. but spent the rest of his life in the Netherlands.
Ariës challenged his Dutch bank's attempts to force him to provide it with a U.S. Tax Identification Number, such as a Social Security Number, if he was to be allowed to keep them, but he said he didn't feel he should be forced to enter the U.S. tax system for this purpose, and went to court.
Although he lost the first round in December, 2020, an appellate court overturned that decision on Dec. 29, ruling that Ariës was entitled to keep his De Volksbank accounts, as long as his total holdings in these accounts never exceed US$50,000.
Assuming this ruling stands, the decision is seen as putting de Volksbank – as well as other banks in the Netherlands, and potentially elsewhere in Europe – in conflict with key elements of the FATCA regulations.
This case is significantly different from most of the others, however, because de Volksbank was and is willing to keep Ariës as an account-holder and client, even though he is technically an American citizen – so long as he met the requirements to provide the Taxpayer Identification data that the U.S. requires the banks to provide, under FATCA.
And it was this, as noted, that the retired Dutch pilot felt he should not, as a Dutch citizen, be obliged to do, in order to keep his Dutch bank accounts.
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