Financial institutions that choose not to accept American customers still must determine whether new or existing clients are so-called U.S. persons in order to comply with Fatca, according to Michael Brevetta, director of U.S. tax consulting at PricewaterhouseCoopers LLP in Singapore.

The definition includes citizens, green-card holders and non-Americans deemed U.S. residents by being present in the country for at least 183 days over a three-year period, which makes them subject to U.S. tax on their worldwide income, according to the IRS.

Compliance Costs

The compliance costs for banks, asset managers and insurance companies "could stretch into the billions of dollars," Brevetta said. Private-banking firms in Hong Kong and Singapore already have operating costs between 88 percent and 90 percent of their revenue, compared with 70 percent at Swiss banks, PricewaterhouseCoopers estimated in a September report.

Penalties for not complying will be stiff. Non-U.S. firms that don't make required disclosures will be subject to 30 percent withholding of certain dividends, interest or proceeds from the sale of assets they or their customers receive from U.S. sources, according to Baker & McKenzie's Weisman, who has conducted workshops and seminars on the proposed rules for current and potential clients in Hong Kong and Singapore.

"Overwhelmingly, financial institutions outside the U.S. don't like it, for obvious reasons," Weisman said, calling the withholding tax a "stick" the U.S. is wielding. "The U.S. is outsourcing a tax-compliance function, which is enormously expensive."

Renouncing Citizenship

Americans who don't comply with Fatca are deemed "recalcitrant," and income they receive from U.S. sources also is subject to a 30 percent withholding tax, said Jason Choi, a Singapore-based tax lawyer with Latham & Watkins LLP.

Renouncing citizenship is an option chosen by increasing numbers of Americans. A record 1,780 gave up their U.S. passports last year compared with 235 in 2008, the IRS reported.

Royal Bank of Canada, the sixth-biggest wealth manager with $435 billion under management as of the beginning of 2011, said it sees an opportunity as competition is exiting, including in emerging markets, where it manages $60 billion.

"We are one of the few wealth managers to hold a Securities and Exchange Commission license offering U.S.- compliant investment advice in Switzerland and London and see an opportunity in accepting tax-compliant U.S. persons as clients outside of the U.S.," said Barend Janssens, the Singapore-based head of the bank's wealth-management unit for emerging markets.

Tax Evasion

Coutts, the wealth division of U.K. government-owned Royal Bank of Scotland Group Plc, plans to comply with Fatca and to continue accepting tax-compliant U.S. persons, according to Tim Winter, associate director of the U.S. Competence Centre at Coutts. The London-based bank has invested since July 2010 in a "global program of work established to support the implementation of Fatca," he said in an e-mail.