I am a U.S. citizen living and working abroad. I have always been an upstanding, taxpaying American. I served in the Peace Corps and donate my time to community service. Never have I attempted to pay less than my fair share of taxes nor tried to hide in offshore tax havens. Yet I, and the 7.2 million Americans currently overseas, am being blacklisted by a little-known tax policy.

The Foreign Account Tax Compliance Act (FATCA) bill proposed by Senators Max Baucus (D-Mont) and Charles Rangel (D-NY) in 2009 to catch tax evaders has inadvertently ensnared everyone else. Under FATCA, Foreign Financial Institutions (FFIs) have until 2014 to disclose the full account information of their American and green card holding clients. If these foreign banks, brokerages, and insurance companies fail to meet Washington's expectations, they face the steep penalty of 30% automatic withholding on U.S.-sourced income. They are pushed into a corner of divulging client information, exiting the U.S. economy, or rejecting U.S. expatriates.

FATCA is making it increasingly difficult to open personal bank accounts. Major banks such as HSBC, Deutsche Bank, DBS, and UBS have admitted to turning away holders of American passports. If you are an American living or working in Switzerland, for example, you can say "goodbye" to innocent until proven guilty. The default bank response will be to assume you are Al Capone, because actually trusting an American client could elicit a hefty IRS fine in the future.

The same applies for small businesses. Corporate bank accounts for U.S.-owned foreign companies face stiffer "Know Your Customer" hurdles and paperwork. FFIs will have to form dedicated teams simply to navigate the new FATCA compliance, according to Bank of Singapore CEO Renato De Guzman. Minimum deposits and bank fees are increasing to cover the cost of complying with FATCA. Small businesses are forced to deposit minimums upwards of $100,000 and pay higher monthly maintenance fees. Foreign banks simply don't want the hassle of playing freelance IRS agents.

I, for example, would like to take my U.S.-based savings and invest in the U.S. economy, but most international and U.S. brokerage firms decline to accept expatriates due to the onerous compliance requirements. My money, it seems, is not as good as a senator's money. Even buying personal insurance is more challenging as foreign insurers fall under the dragnet of FATCA.

Perhaps even worse than FFIs refusing U.S. clients, foreign banks may eventually divest from the U.S. market for fear of being taxed an extra 30%. Capital flight would be one more burden on an already tepid U.S. economic recovery. Meanwhile, the law would only raise a paltry $800 million per year, less than 1 percent of the $100 billion claimed to be lost each year to tax evasion according to Centre for Freedom and Prosperity's Andrew Quinlan. This gap in revenue is likely due to tax evaders' ability to remain hidden through layered corporate structures, nominee shareholders and trust agreements. The fact is that law-abiding citizens will forfeit privacy, while money launders and terrorists will manage to stay invisible.

The legislation is simply un-American. Recent NSA spying allegations aside, privacy has always been protected for U.S. citizens. Yet FATCA affords no financial privacy. It requires banks to report back to the IRS account numbers, names, addresses, balances, and transactions. Why should foreign banks be expected to trust U.S. citizens when even their own government does not extend the same faith? And imagine if this disclosure requirement was applied by other nations. Would America's banks really be comfortable reporting back to Mexico, China, or Russia the financial portfolios of the 11 million immigrants living in the U.S.?

The Romans had a phrase -- civis romanus sum -- to describe the far-reaching protection of the empire. A Roman citizen could travel the globe and be afforded the same status and rights as those of home, merely by proclaiming his citizenship. FATCA is the exact opposite. Financial institutions now view me as a potential fraudster and troublesome American. American citizenship should always be a badge of honor, but FATCA is making it a scarlet letter.

Tax evasion is certainly a problem. $183 billion dollars sits offshore in U.S.-owned accounts. The bill's founders, Senators Baucus and Rangel, receive much of their campaign contributions from the biggest abusers of offshore holdings -- Goldman Sachs, AIG, Citi, and JPMorgan. It's a shame the little guys have to take the fall.

Ryan Rommann writes on tax and economic policy for Healy Consultants -- Singapore. He can be reached at Ryan@Healyconsultants.com