Little is more embarrassing and enraging for Americans abroad than listening to friends discuss resigning from their country’s tax and compliance system, enjoying low or tax-free incomes and capital gains. Knowing that the albatross of the Empire’s tax and paperwork system always remains with you unless you renounce citizenship is never pleasant. Even less pleasant is learning that citizenship-based taxation is far from the only ball chained to the legs of every American residing abroad.
FATCA:
However, what makes the US’ bank reporting system so insidious is that it singles out Americans on the other side of the planet and makes them pariahs in the banking system. From Panama to Papua New Guinea, banks ask if you are a US person. By answering yes, you force banks to take on a huge compliance burden of reporting your details back to the Empire, under threat of sanctions and losing access to the SWIFT system. The US is essentially the only country able to coerce practically every country to comply with such a regulation. If the Central African Republic was asking for that data, countries would just ignore the request. For the average person, the bank perceives the cost of this compliance too high to justify the client, so unless you are depositing large sums, the bank refuses your business.
The American regime also limits job prospects for many Americans abroad as gaining access to a company bank account would require form filing. It is simply easier and less risky to not hire the American for a senior position which has bank account signing permissions.
FATCA and related regulations also shun or limit Americans from a variety of investments abroad if it would mean greater reporting requirements or accredited investor rules.
Embargos And Sanctions:
The United States is the world’s largest imposer of sanctions, accounting for over 2/3 of them. The trouble with the United States’ sanctions is the combination of the number of sanctions and the strong enforcement mechanisms the country has. This makes conducting business a logistical nightmare (or downright impossibility) in many nations.
Even in countries that are not traditionally on a blacklist, these sanctions pop up. Just the other week the US Treasury acted against a few Mexican financial institutions. In early 2023 sanctions were placed on Horacio Cartes, one of the most prolific businessmen in Paraguay, and the nation’s former president. This made it illegal (from the US side) for US persons to deal with certain banks and conglomerates in the country, not a good thing for those trying to build a business there.
Besides making business essentially impossible for Americans in certain countries, being associated with these sanctions on the basis of your citizenship does not exactly breed good will when visiting those countries. Of course, many people understand the difference between people and governments (just ask Westerners how they are treated when visiting Iran), but not all may be so understanding.
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Corruption Rules:
Like it or not, living in and building businesses in other countries can often involve corruption. It can be as simple as greasing a few palms to make sure your paperwork is filed in a timely manner or a large process involving the president to get a mining permit. However, as part of the government’s policing of Americans around the world, American companies are barred from participating in this practice under the 1977 Foreign Corrupt Practices Act.
Imagine the disadvantage the American businessman is trying to get his venture off the ground versus a Chinese businessman somewhere in Central Africa or Latin America. The American company is not even permitted to use an intermediary to bribe foreign officials.
Thankfully, President Trump decided to halt most enforcement of the Foreign Corrupt Practices Act in early 2025 for a few months, but a change in policy could mean that penalties are just retroactively applied in the future.
While many people are not vocally in favour of corruption, it is impossible to ignore that it is pervasive part of business in many parts of the world. Simply put, if you cannot bribe officials, you will be put behind those who can. The American government works against American businesses and its influence in foreign countries through this policy.
Travel:
Many countries restrict the travel of Americans into their countries, placing harsher visa policies, and in some cases, outright having bans on Americans visiting.
- Iran— While most tourists to Iran can travel freely around the country, Americans (alongside UK and Canadian citizens) need to be with a tour guide for the duration of their trip.
- Venezuela— Whilst many nationalities can enter Venezuela visa free or obtain a visa with minimal hassle, Americans must wait months to obtain a visa. The reason for this is that visa applications for Americans are handled centrally in Caracas, rather than the embassy approving/rejecting the application, as is the norm. On top of that, there are reports of those born in the US but traveling on other passports to Venezuela facing issues on arrival and even refusal of entry.
- Afghanistan— Just at the end of June 2025 it was reported that Americans would be banned from visiting the Wakhan Corridor of Afghanistan.
- Libya, Syria— Before 2023, there was a substantial period of time where Americans were essentially banned from visiting Libya and Syria. More interestingly, these countries were known to ban all people who happened to be born in the US traveling on other passports.
Whilst the countries listed above are not tourist hotspots, it speaks to a worrying trend that singles out Americans and makes their travel to certain destinations much less free than other Westerners.
PROTECT 2003: -- Where do you draw the line?
Now not all this extraterritorial legislation would be considered heinous to most freedom minded individuals. Take for instance the PROTECT Act of 2003. This law, which works to combat child sexual abuse, has a section (105) which restricts Americans and legal residents from engaging in any sexual acts with minors while abroad. If convicted, offenders could be imprisoned for up to 30 years. Personally, I would like to see child rapists run up a tree, so am not opposed to this law on face value.
However, given the propensity of government to only expand and pile on new regulations on the citizenry, I urge supporters of a law like this (including myself) to question how many of these laws they should support lest more begin to crop up. To the related topic of prostitution, it is illegal essentially everywhere in the US. Applying the logic of the PROTECT Act, should the US government prohibit US people from visiting Amsterdam’s Red-Light District or a Colombian motel with consenting adult women?
Closing
The United States unique (in practice) policy of citizenship-based taxation is a well-known drawback of its citizenship by those who have spent any time outside the country. However, there are many other negative attributes to the citizenship that are less known by Americans abroad and can be fatal for those trying to build businesses and lead lives outside the US long term.
