A Zurich Bank is hitting US clients with hefty fees after passing on extra costs linked to their accounts directly to the customers, according to reports on Thursday.
The Zürcher Kantonalbank (ZKB) has reportedly hit American customers with fees of 360 francs per year for their personal accounts after passing on the alleged additional costs associated with US clients in Switzerland.
All ZKB customers with a Swiss address and American passport were sent a one-page letter about this last week.
The letter, which was first reported on by financial news platform Inside Parade, explained that existing US customers had become “more demanding” for all banks due to legal and internal compliance requirements.
The bank said it experienced the “higher expense” even for its US customers living in Switzerland and “regardless of the type or number of banking services used or transactions conducted”.
“In the spirit of a polluter-pays fee policy, we have therefore decided to apply the basic international fee of CHF 90 per quarter […],” the letter continued.
The 90 francs fee – which comes on top of any other banking costs – would be charged at the beginning of January, April, July, and October, totalling CHF 360 a year, according to the correspondence. Customers living abroad already have to pay this fee.
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But there are a few exclusions: customers with a mortgage or a loan with the bank or a “3a” retirement savings or rental deposit account with ZKB would be exempt from paying the fees.
The bank had not disclosed how many customers were affected at the time of writing or on the extent of the additional costs it mentions in the letter.
Unsurprisingly, Democrats Abroad Switzerland, the local branch of the US Democrats party, has called the measure “incredibly unfair”, Aargauer Zeitung reported.
Spokeswoman Debra Hitti said it was the first time anybody had heard of a bank passing the costs of complying with US regulations directly on to customers with US citizenship.
Banks in other countries were also subject to international reporting obligations, but do not pass these costs on to their customers, she said.
Part of the problem may be down to some banks’ misinterpretation of the US FATCA banking law, Hitti told the news site.
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“For example, banks are only required to report accounts with a balance of over $50,000, yet some banks report all accounts, regardless of the balance,” she said.
And other banks apparently demand US tax returns from their US customers under threat of account closure if they fail to deliver them even though this is also not required by the US banking law.
Unlike most countries, the US currently has a ‘citizenship-based’ tax system, meaning Americans must complete tax returns and declare foreign-earned income to US authorities, even if living abroad.
It’s not clear whether ZKB was still accepting new US customers but given the new fees, it’s possible many will turn to other banks with lower charges.
UBS, for example, charges “the usual fees for private customers” for Switzerland-based US citizens, while Postfinance doesn’t charge any additional fees for foreign customers living in Switzerland, the paper reported.
Berner Kantonalbank does, however, charge due to the increased regulatory requirements: US customers living in Switzerland pay a monthly fee of 20 francs.
