Why are US expat brokerage accounts being closed?

The imposition of bans on non-residents, including American citizens, from purchasing U.S. mutual funds has emerged as a standard practice. These measures extend their reach to various financial accounts, significantly altering the landscape for investors.

Bank accounts, which serve as the cornerstone of financial transactions, are now subject to these restrictions. This means that individuals who do not meet the residency criteria face limitations in their ability to access and manage funds held in U.S. banks.

Brokerage accounts, a crucial avenue for investing in securities, have also fallen under the purview of these new restrictions. Investors seeking exposure to the U.S. financial markets through this channel now face additional hurdles.

Retirement accounts, designed to secure individuals' financial future, are not exempt from these changes. IRAs and 401ks, among others, have been impacted, potentially disrupting long-term financial planning for those affected.

Commentators have attributed these developments to the Foreign Account Tax Compliance Act (FATCA) and the intensification of offshore tax enforcement efforts. FATCA's aim to combat tax evasion has resulted in stricter regulations governing financial transactions involving non-residents.