In February 2013, Switzerland signed an agreement with the US to adopt the Foreign Account Tax Compliance Act (Fatca), which came into force under Swiss law on 2 June 2014.
Fatca, which was implemented by the US in 2010, requires all non-US financial institutions to search their records for US domiciled clients and report their assets and identities to the US Department of the Treasury.
Opportunity to specialise
Anne Liebgott, who founded a platform that connects US expats with SEC- registered financial advisers called americanswelcome.swiss, says the implementation of Fatca meant many Swiss financial institutions ended their dealings with US clients.
“There are still a number of financial institutions that just do not want to deal with the processes of Fatca” Liebgott said.
She said a major development of Fatca was that only Swiss financial advisers registered with the US Securities and Exchange Commission (SEC) can now provide cross-border services to US domiciled clients without restrictions.
Daniel Zurbruegg, a Swiss SEC-certified financial adviser from BFI Infinity, agreed that Fatca has resulted in Swiss IFA’s having to specialise if they want to maintain dealings with US clients.
“I think it [Fatca] created a reaction in that firms either specialise on US business or they simply don’t do it anymore.
“The reality today is that with increasing regulation and complexity, it is impossible to serve ten markets at the same time,” Zurbruegg said.
He said firms that have specialised are now much better positioned and equipped to deal with US clients.
“We certainly regard our firm as being modern and well positioned, kind of the new version of Swiss private banking,” he said.
Oliver Hohermuth, director at Reyl Overseas, says he would describe Fatca as an “enhanced reporting requirement” rather than a regulatory overhaul.
“It is pretty simple – either you comply or you are out of business,” Hohermuth said.
“As an SEC-registered investment adviser, we have been operating under the law as defined by the U.S. regulator from the beginning,” he said.
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