# Current US Capital Controls?



## Guest

Hi all,

Before I renounce early next year I have decided to close my last bank account in the US and then make my appointment at the consulate. What I don't understand is how much of the money will be taxed or confiscated when I transfer it abroad by the US? Without being too specific I am speaking about a large savings account. I have never transferred more than small amounts at a time out of the US so I don't have any experience with transferring huge amounts out and whether or not they they take their cut somehow before letting it pass through. 

I can't find any info on current capital controls beyond the ones which FATCA will introduce. 

Thanks


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## Guest

If this is a straight forward savings accouint...then you have most likely already paid tax on the accured interest. Its your money, close out the account..no problem.

FATCA will not be here for a couple of years yet...so I wouldn't worry about that. Just keep records as you will have to identify on the 8938 form (if it ever comes out of draft) if you closed that account for a specific year...they dont ask why.

I am sure others with more knowledge than me will help you answer your question as well


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## Bevdeforges

The US taxes income. Moving a large account out of the US requires a declaration of the source (i.e. your savings account) and the "purpose" of the transfer (for which you can say something like "opening a bank account in XXXX" or "consolidating my bank accounts"). But there should be no tax on the transaction of the move.

And actually, the bank will do the declaration stuff for you anyhow.
Cheers,
Bev


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## AmTaker

DonPomodoro said:


> Hi all,
> 
> Before I renounce early next year I have decided to close my last bank account in the US and then make my appointment at the consulate. What I don't understand is how much of the money will be taxed or confiscated when I transfer it abroad by the US? Without being too specific I am speaking about a large savings account. I have never transferred more than small amounts at a time out of the US so I don't have any experience with transferring huge amounts out and whether or not they they take their cut somehow before letting it pass through.
> 
> I can't find any info on current capital controls beyond the ones which FATCA will introduce.
> 
> Thanks


There are no US capital controls (well, if you're moving billions, maybe . There are none under FATCA as well, AFAIK. No amount will be taxed (let alone confiscated). If you transfer it via normal banking channels (wire, ACH etc.), there should be no issue at all. For transfers > 10K (I think) , banks may require some proof of id from you for reporting purposes when doing transfers (maybe even that may not be required for regular customers). They are required to file reports on transfers. 

The only reporting requirement for you is if you transfer more than 10K in cash or bearer instruments across US borders, then you are required to report it (I think most countries have similar requirements these days)


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## Guest

Thanks all for the replies - This was very good news to hear. I plan to transfer everything out in a couple of months and hope that it goes as smoothly as mentioned. Cheers


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## Guest

Mach7 said:


> If this is a straight forward savings accouint...then you have most likely already paid tax on the accured interest. Its your money, close out the account..no problem.
> 
> FATCA will not be here for a couple of years yet...so I wouldn't worry about that. Just keep records as you will have to identify on the 8938 form (if it ever comes out of draft) if you closed that account for a specific year...they dont ask why.
> 
> I am sure others with more knowledge than me will help you answer your question as well


I have a question as I will also finish renouncing early in 2012. Since the 8938 has yet to be finalized, I would think a renunciate would not be required to file the 8938 for 2011. Does anyone know?


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## Ladyhawk

I am also transferring most of my money out of my single US account, a chequing/savings account. I will leave some because I do travel there and I do use it to pay some bills. But I am moving small amounts at a time over the next few months. My bank here (CIBC) seems to have no problem accepting the money into my US$ account here, ie I could have moved the entire amount with apparently no comment from the Canadian bank. I did wonder about the rules in the US about moving money out, so I am moving a few thousand at a time.


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## eucitizen

AmTaker said:


> There are no US capital controls (well, if you're moving billions, maybe . There are none under FATCA as well, AFAIK. No amount will be taxed (let alone confiscated). If you transfer it via normal banking channels (wire, ACH etc.), there should be no issue at all. For transfers > 10K (I think) , banks may require some proof of id from you for reporting purposes when doing transfers (maybe even that may not be required for regular customers). They are required to file reports on transfers.
> 
> The only reporting requirement for you is if you transfer more than 10K in cash or bearer instruments across US borders, then you are required to report it (I think most countries have similar requirements these days)


Please don't downplay the possibility of confiscation.

Indeed if you do not do the reporting, if you are unaware of the reporting requirement, or if you make an error on the reporting, it may be confiscated. Or rather, you will incur a penalty for the full amount which, to me, is the same thing. 

There was an important judgement on this subject, in 2007 in the case of H.K. Bajakajian vs the IRS, a transfer of 357,000$ offshore without reporting resulted in the IRS confiscating the full amount. 

In the case above, the taxpayer actually won in court against the IRS using the 8th amendment argument (cruel and unusual punishment); But it shows that yes, the IRS will try to apply penalties and punishments to the full extent even when not allowed by the law, and people should be wary, not reassured. 

Who knows how much it cost the taxpayer to defend himself in court against the IRS, I'm guessing not far from the 350,000$ that were - yes, call it what it is - confiscated.


More info: http://www.taxlitigator.com/main/images/stories/Articles/FBAR_Penalty.pdf


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## eucitizen

*careful here too*



Ladyhawk said:


> I did wonder about the rules in the US about moving money out, so I am moving a few thousand at a time.


A series of small, related transfers could be assimilated to one large transfer;

What is worse it could indicate that you are trying to hide something by making transfers under the reporting limit. It could indicate intent to avoid declarations or taxes. 

Do not do this or if you already have I would recommend you declare it.

You are allowed to take your money out. Just do it in a straightforward way and do the required reporting.

Look into the documents for bank transfers, and don't try to do it by making one 9,000$ transfer every week for 50 weeks...

I think if the transfer is to your own account (same account holder name on both sides) the reporting is simplified.


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## Vangrrl

Ladyhawk said:


> I am also transferring most of my money out of my single US account, a chequing/savings account. I will leave some because I do travel there and I do use it to pay some bills. But I am moving small amounts at a time over the next few months. My bank here (CIBC) seems to have no problem accepting the money into my US$ account here, ie I could have moved the entire amount with apparently no comment from the Canadian bank. I did wonder about the rules in the US about moving money out, so I am moving a few thousand at a time.


Ladyhawk, we've always been asked about the source of any money when we've transferred it into the country from abroad. I assume this is to make sure it is drug money or some other such ill-gotten gains. We bank with BNS. I don't think there is any problem with what you are doing on the Canadian end, but I just wanted to let you know you may need to provide something in writing to your bank.


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## AmTaker

eucitizen said:


> Please don't downplay the possibility of confiscation.
> 
> Indeed if you do not do the reporting, if you are unaware of the reporting requirement, or if you make an error on the reporting, it may be confiscated. Or rather, you will incur a penalty for the full amount which, to me, is the same thing.
> 
> There was an important judgement on this subject, in 2007 in the case of H.K. Bajakajian vs the IRS, a transfer of 357,000$ offshore without reporting resulted in the IRS confiscating the full amount.
> 
> In the case above, the taxpayer actually won in court against the IRS using the 8th amendment argument (cruel and unusual punishment); But it shows that yes, the IRS will try to apply penalties and punishments to the full extent even when not allowed by the law, and people should be wary, not reassured.
> 
> Who knows how much it cost the taxpayer to defend himself in court against the IRS, I'm guessing not far from the 350,000$ that were - yes, call it what it is - confiscated.
> 
> 
> More info: http://www.taxlitigator.com/main/images/stories/Articles/FBAR_Penalty.pdf


Please dont spread alarmist and inaccurate nonsense. Firstly, the bajakajian case did NOT involve the IRS at all. Bajakajian was transporting $357K in cash across customs in a money belt and gave a false declaration at customs that he did not have over 10K in cash. Customs did indeed find this money and the US Government bought a suit under money laundering laws. The Supreme Court in 1998 (not 2007) threw out the forfeiture under the 8th amendment. 

To reaffirm
1) There are essentially no capital controls in the US (which was the original question)
2) A transfer through regular banking channels is no issue at all, the bank will do the declarations required, even if billions are involved. 
3) Transporting more than 10K US $ in currency and bearer instruments across borders does require declaration. If you 'forget' to declare the money at customs, you can indeed run into serious trouble where large sums are involved. I think almost all governments have similar laws against money laundering, even most tax havens. 
4) Even in case 3, the US government cannot confiscate all the sums involved because of the Supreme Court decision. 

The bottom line is that 'capital controls' are not an issue at all for anyone transporting money out of the US. Money laundering laws (in the US or Canada for that matter) could be an issue if large sums are transported in cash or bearer instruments.


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## AmTaker

Ladyhawk said:


> I am also transferring most of my money out of my single US account, a chequing/savings account. I will leave some because I do travel there and I do use it to pay some bills. But I am moving small amounts at a time over the next few months. My bank here (CIBC) seems to have no problem accepting the money into my US$ account here, ie I could have moved the entire amount with apparently no comment from the Canadian bank. I did wonder about the rules in the US about moving money out, so I am moving a few thousand at a time.


There should be no problems in general, the bank will make the declaration. However, most countries (and that includes Canada) have laws against breaking a large transaction into several small transactions just for the purposes of avoiding any reporting. The limit is 10K US in most cases. 

That doesn't hold for transactions over several weeks or months.


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## pwdunn

AmTaker said:


> The bottom line is that 'capital controls' are not an issue at all for anyone transporting money out of the US. Money laundering laws (in the US or Canada for that matter) could be an issue if large sums are transported in cash or bearer instruments.


$10,000 doesn't really very much money. And you have to report that before taking that much out of the country? There are no 'capital controls'? Seems like capital control to me. What about the exit tax? The US is going to sock it to a rich person who expatriates. Seems like a capital control. What about FATCA? You either tell us everything you know about anyone in your bank with US citizenship, US birthplace or a greencard, or we keep 30% of all your transactions. Seems like a capital control to me. You have to tell us about every single little TFSA, RRSP, money in any bank account and now, all your foreign assets in the new 8938. Seems like capital control to me.

And why shouldn't the United States institute capital controls? They are running a deficit of in the range of $1.5 trillion per annum since the savior Obama took office. The reason, you would think, is because of all of us expats not paying our taxes and FBAR fines.

No, there is no cause for alarm. Look away. There's nothing to see here.


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## pwdunn

AmTaker said:


> There should be no problems in general, the bank will make the declaration. However, most countries (and that includes Canada) have laws against breaking a large transaction into several small transactions just for the purposes of avoiding any reporting. The limit is 10K US in most cases.
> 
> That doesn't hold for transactions over several weeks or months.


A law against breaking a large transaction into small transactions to avoid reporting. Interesting. But it is not a capital control.


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## AmTaker

PetrosResearch said:


> $10,000 doesn't really very much money. And you have to report that before taking that much out of the country? There are no 'capital controls'? Seems like capital control to me. What about the exit tax? The US is going to sock it to a rich person who expatriates. Seems like a capital control. What about FATCA? You either tell us everything you know about anyone in your bank with US citizenship, US birthplace or a greencard, or we keep 30% of all your transactions. Seems like a capital control to me. You have to tell us about every single little TFSA, RRSP, money in any bank account and now, all your foreign assets in the new 8938. Seems like capital control to me.
> 
> And why shouldn't the United States institute capital controls? They are running a deficit of in the range of $1.5 trillion per annum since the savior Obama took office. The reason, you would think, is because of all of us expats not paying our taxes and FBAR fines.
> 
> No, there is no cause for alarm. Look away. There's nothing to see here.


1) 10000 in cash has to be reported when you move across borders. I think there are similar rules in Canada as well. In most EU countries too. I think you would have to search very hard to find a country that does not have reporting requirements on cash across borders. Even Switzerland likely has such rules. There is no reporting requirement on individuals for transfers that are not cash. 
2) That is not a capital control, since the general definition of capital control is 'prohibition' of convertibility of currency or very strict regulations regarding convertibility. 

If you want to define this reporting requirement as a capital control and be alarmed, that is your prerogative. You should be equally alarmed at the idea of living in Canada, EU countries, Singapore etc. since they all have similar restrictions. You would have to become stateless to be unalarmed . 

Could capital controls be instituted in the future ? Yes, of course. Any country can do so, and most have instituted controls at one time or the other. But the original question was whether there would be any problem in changing or transferring US funds NOW, and the answer is no. I have acquaintances who do transfers (and large ones, into hundreds of thousands) every week as part of business. And I have 2 friends who do transfers of millions almost every day (they are professional currency traders), many with American counter parties.


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## pwdunn

AmTaker said:


> 1) 10000 in cash has to be reported when you move across borders. I think there are similar rules in Canada as well. In most EU countries too. I think you would have to search very hard to find a country that does not have reporting requirements on cash across borders. Even Switzerland likely has such rules. There is no reporting requirement on individuals for transfers that are not cash.
> 2) That is not a capital control, since the general definition of capital control is 'prohibition' of convertibility of currency or very strict regulations regarding convertibility.
> 
> If you want to define this reporting requirement as a capital control and be alarmed, that is your prerogative. You should be equally alarmed at the idea of living in Canada, EU countries, Singapore etc. since they all have similar restrictions. You would have to become stateless to be unalarmed .
> 
> Could capital controls be instituted in the future ? Yes, of course. Any country can do so, and most have instituted controls at one time or the other. But the original question was whether there would be any problem in changing or transferring US funds NOW, and the answer is no. I have acquaintances who do transfers (and large ones, into hundreds of thousands) every week as part of business. And I have 2 friends who do transfers of millions almost every day (they are professional currency traders), many with American counter parties.


First, I did not say that Canada and other countries don't have capital controls. Of course they do. But secondly, I made relatively long list of things that show that not only does the US want to monitor all funds going in and out of the country, but they also want to reduce the flight of capital of the wealthy; while this is not an absolute restriction of the flow of money, it is nevertheless an alarming capital control, and here I am especially talking about FATCA. It is not unlikely that your friends will have to change the way they do business, or possibly, they will not be able to continue at all--certainly the attempt at the control exerted by the US over FFIs and fact that the sale of all financial instrument by a non-compliant FFI (i.e., one that isn't controled by the US) will be subject to 30% withholdings, this is going to change the financial world in a dramatic fashion.

FATCA should alarm the world. I'm saying if you don't get your investments out of the US soon, it may be that you will miss the mad rush to the exits as 14 trillion in foreign private capital seeks a more welcome home.

But I am especially alarmed by the US wanting to know everything about my foreign assets (form 8938). They don't need to know that. But it is a capital control, becaue first you have to know about something before you can tax it. Knowledge is power. This is why they will never know. I am no longer an American.

There were laws against gluttony in the Weimar Republic. But they still let you eat--if you could afford any food.


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## Peg

eucitizen said:


> Please don't downplay the possibility of confiscation.


The US Gov cannot confiscate my Canadian money in a Canadian bank or under my Canadian-made mattress.

The US Gov could choose to penalize me but I am cautiously optimistic that they will not...


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## Ladyhawk

Vangrrl said:


> Ladyhawk, we've always been asked about the source of any money when we've transferred it into the country from abroad. I assume this is to make sure it is drug money or some other such ill-gotten gains. We bank with BNS. I don't think there is any problem with what you are doing on the Canadian end, but I just wanted to let you know you may need to provide something in writing to your bank.


Thanks for your replies. I talked to a teller at my bank a few months ago before I moved some US$ up here to my account. She said there was no problem and nothing I had to fill out, as far as Canada is concerned. I sent that money down to a savings account in a US bank over a period of many years, sending $1-5K at a time. Now I need the money up here, so I am bringing it up once or twice a year, $1-3K at a time, for my own use. This is simple transfer of after-tax savings between two savings accounts located in two countries. Is this really an issue?


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## Vangrrl

Ladyhawk said:


> Thanks for your replies. I talked to a teller at my bank a few months ago before I moved some US$ up here to my account. She said there was no problem and nothing I had to fill out, as far as Canada is concerned. I sent that money down to a savings account in a US bank over a period of many years, sending $1-5K at a time. Now I need the money up here, so I am bringing it up once or twice a year, $1-3K at a time, for my own use. This is simple transfer of after-tax savings between two savings accounts located in two countries. Is this really an issue?


No I don't think so. In our case (really, my in-laws) it was an amount over $50,000 being wired in from East Africa. The optics of such a transaction would reasonably raise an eyebrow at a Canadian bank. 

If you WERE asked a question, it would be as simple as saying what you did = transferring your own personal assets from a US bank account to a Cdn one.


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