The Foreign Account Tax Compliance Act, better known as FATCA, was passed in 2010 as part of the HIRE act. Starting in 2014 foreign financial institutions (FFI) will be required by the US government, under FATCA, to report information regarding accounts of US citizens, US persons, Green Card holders and individuals holding certain US investments to the IRS. This law requires foreign financial institutions such as your local bank, stock brokers, hedge funds, insurance companies, trusts, etc. - to report directly to the IRS all their clients who are "US persons.” FFIs that do not become compliant will be subject to a 30% withholding on these investments, which will directly impact FFI clients.
FATCA also requires US citizens who have foreign financial assets in excess of $50,000 (higher for bona fide residents overseas – $200,000 for single filers and $400,000 for joint filers – see the IRS website for more details) to report those assets on a new Form 8938 to be filed with the 1040 tax return. Instructions for form 8938 were published in December 2011 and can be found on the IRS website.
(from ACA What is FATCA?)
FAWCO U.S. Tax & Banking Committee Presentation on FATCA & U.S. Persons in Europe: FATCA and its Consequences for Tax, Banking and Financial Planning PDF (2MB)
For more explanations and basic definitions see White Lighthouse Investment Management's FATCA Implications for Financial Institutions and US Persons in Switzerland PDF (41 KB)
