Fatca requires foreign financial institutions to provide the IRS with details on US taxpayers they deal with who have investments of $50,000 or higher.
A penalty of 30 per cent withholding tax will be levied on the gross proceeds of any US assets for non-compliance.
Schroders managing director of UK intermediary Robin Stoakley says a lot of investors will be caught by the act.
He says: “The introduction of Fatca and the RDR at the same time in 2013 will be a perfect storm for advisers. The industry will have a lot on its plate. Fatca could result in a number of firms’ advisers being restricted from buying funds that invest in US securities.”
Informed Choice managing director Martin Bamford says: “Fatca could create an administrative burden for fund managers and insurance companies.
“Most fund managers will be unaware of the personal circumstances of investors, so they will either need to approach each investor to obtain a declaration or rely on the close relationships IFAs have with clients to supply this information.”