Liberty and justice for all United States persons abroad

The Isaac Brock Society

1,012 thoughts on “FATCA Discussion Thread (Ask your questions) Part One”

  3. @Badger…

    Good to have the Hale Shepard reference here too.  I posted it back in July, so time for a reminder.  🙂 

    Demystifying the Complex Rules

    Time does move on, and even I was surprised it was that long ago.   We are that much closer to FATCAgeddon

    @bubblebustin…

    Good question.  At first I thought it was referring to the withholding required for pass through payments from a compliant/participating PFFI to a non compliant/non participating NPFFI  but now I am not so sure.  

  4. @John Brown…  Interesting indeed..

    Unable to read the Risk Net article from that link, but if you paste the title into Google News it comes up. 

    FFIs the world over are expected to be compliant under Fatca. For entities operating in jurisdictions with sanctions, this poses some pretty tricky questions – not least, if they will even be allowed to comply with Fatca and if so, how. Jessica Meek investigates

    I guess if you are sanctioned, what do you care?  On the other hand, it might be a convenient way for the government via their FFIs to obtain information on US Persons for hostage negotiations with the USG, if an unsuspecting US Person (green card holder say) has an account there.   IE, the Lebanon article 

    but on a non flippant side, here is what the real question is:  From the article..

    In the Middle East and North Africa, for example, many institutions headquartered in non-sanctioned jurisdictions have subsidiaries or associates in sanctioned jurisdictions such as Syria or Sudan. This is causing such concern that in September the Union of Arab Banks wrote to the US Internal Revenue Service (IRS) to ask for clarity on this point.

    “These countries are under US sanctions. The Fatca regulations do not clarify whether banking entities in such countries will be allowed to register under Fatca and to comply with the requirements under Fatca,” the letter says.

    It goes on to ask whether the parent company would be affected if the IRS – or the local government – did not permit its subsidiary to register under Fatca. “Would the sanctioned entities operating in a sanctioned country like Sudan and Syria be allowed to register as a limited FFI?” it asks.

    and here is the Catch 22.

    as things stand, sanctions legislation states that the US financial system cannot be used by or made available to sanctioned countries. Allowing such jurisdictions to register as a participating FFI conflicts with this, Sexton says, as it would mean a relationship between the entity and the US. “It will be very interesting see how [the US] deals with that conflict,” she adds.

    The counterpoint.

    “By definition the sanctioned entities will have so few ties with the US from a transaction standpoint that whether or not they comply with Fatca is irrelevant anyway,” he says.

    Iranian convolution

     “They won’t comply, they won’t strike an agreement with the US IRS and they are simply just going to stay out of scope,” 

    But (Dual Citizenship issue raises its ugly head) 

    there is a complication for Iranian banks in that there are many Iranians holding dual Iranian-US citizenship. If they live in Iran they will need to report their worldwide assets and income as stated under Fatca. “If they have those accounts with a bank in Iran, how is that going to work if that’s a non-participating FFI?

    You can read the rest. 🙂

    Regarding the Chile piece.

    Amcham seems a logical place to be warning U.S. persons having business relations in a country, but wonder how many of these around the world are doing this?I have not seen anything recently in the way of warnings out of the NZ Amcham, other than the statement that NZ Govt to pursue FATCA agreement with US, as if this has nothing to do with U.S. unilateral imposition of its will!

    Maybe I should research some other Amchams around the world to see what they are saying, or NOT!

  5. @John Brown, Just Me

    It would be totally weird if the US was to impose FATCA on nations that they sanction. (Kind of like accepting refugees from countries that we have embassies in). But weird is the new normal in a world with FATCA.

  6. @Just Me,

    Much to ponder about sanctions/FATCA Catch 22. Great analysis on your part! 

    An interesting thing I’ve noticed about the various AMCHAMS that I’ve come across throughout my travels is that many of them are headed by local nationals rather than American expats. Perhaps it may be due to the high percentage of longterm expats having an allergy for all things connected to Uncle Sam, not wanting to get caught up in his tentacles. Great for promoting American exports eh?  

        

     

  7. Some tongue-in-cheek relief…

    You have all seen this, right? It has been posted several times. 


    Now, just out some new Canadian technology to allow Dual Citizens and accidental Americans to remain invisible to FATCA FBAR searches in Canada   http://bit.ly/RnuJ9q  🙂  or how not to be seen. 🙂  

  9. Great video of Monty Python demonstrating the effectiveness of drone strikes on expats. Schumer, Levin, Rangel and Grassley will slip it into their next bill for sure. 

  10. The new “Fair Share Drone” capable of firing Anti-Expat FATCA guided FBAR missiles from thousands of kilometers away. To be unveiled no later than the 1st of January 2014.

  11. FFIs still ditching US clients in light of FATCA

    You would think that given the impact that this have, the US would reverse course on FATCA. I wonder when the problem is going to be raised by multinationals trying to send expats abroad. Multinationals need to help the repeal effort. The problem is that it hasn’t been a problem yet for them. Maybe banks should be more aggressive in doing that and the US would back off.

  12. Why would a multinational want to send an American abroad?  They would have to report the private financials of their company back to the IRS on the FBAR, which is against SEC rules.  US firms have to hire locally.  THe president has stated that he doesn’t want jobs overseas, so everyone has to stay home.

  13. To transfer knowledge, how-to, company values (spirit). It might be more difficult to do by sending foreigners to the US. I guess it can be done the other way round too. In my company, where we have multiple development centers in different countries, we’re sending senior people and managers on 2-4 years assignments abroad. This is important especially when creating these branches abroad.

    I guess this might be less important to bigger multinationals already implanted, but I see that as crucial for small to mid-size companies that are expanding abroad.

    Mark, you were kidding in your comment, right?

  14. I do have this little tendency to be a smart ass.  But those managers cannot have financial authority for their bank accounts, otherwise they will break SEC rules (against the law, criminal offense) and their confidentiality agreements by reporting company accounts back to the IRS.  This means that many critical functions overseas cannot be staffed by US persons.  This would include any foreign personnel who keep their US green cards—-they cannot go home and have financial authority.

  15. Unless they officially give up their green card by filling out the correct form, right, which would be equivalent to giving up US citizenship?

  17. some of the other experts can tell you here, but they might have to pay 450 macaronis and an exit tax too.

  18. @Bubblebustin…

    Yes, the short link got too many HTML attributes and I didn’t catch it on the edit.  Sorry about that. It should have been   http://bit.ly/RnuJ9q   But you got the right link.

    @Chrisrophe…

    I looked up that Risk Net link via google news, as the link as published just takes you to their paywall.  I note they think that IGAs will even make FATCA more expensive than they originally thought. 

    FFIs have been working hard on their Fatca compliance programmes over the last two years, but some have been weighing up whether the income from their US clients is worth the investment in Fatca compliance. Jessica Meek reports on speculation that FFIs have been ditching US clients in light of Fatca

    In September 2011, Operational Risk & Regulation reported that it was estimated that such compliance programmes would cost in the region of $240 million for a global FFI and between $60 and $100 million for a large FFI without retail clients.  This estimate was made before the question of intergovernmental agreements (IGAs) was raised, which brings a further dimension to Fatca compliance, and potentially more complexity and cost to Fatca compliance programmes.

    Speaking of U.S. clients…

    Yvonne Kunihira-Davidson, a London-based tax reporting and withholding specialist at law firm Burt, Staples & Maner, explains that by moving US clients to other wealth managers and third parties, institutions are trying to get to the position of being deemed compliant because they have no US accounts.

    She explains that this would allow an institution to avoid the need for reporting. Not only that, it means that investment in a compliance programme to recognise US persons and US indicia is not necessary, as there wouldn’t be any.

    “To be non-reporting, to have the lowest compliance obligations under Fatca, means you’re an exempt entity,”

    Trimming off the FATCA 

    It may seem extreme to cut off business to a whole group of clients and potential clients, but with the costs of Fatca compliance running into the hundreds of millions, for some it makes sense.

    Marylouise Serrato, executive director of lobbying group American Citizens Abroad, says she receives communications daily from US citizens all over the world who are facing difficulties in various aspects of their banking life as a result of Fatca.

    “[They face problems] regarding maintaining existing bank accounts, opening new bank accounts and accessing financial vehicles such as mortgages, pensions and insurance plans due to the upcoming Fatca legislation,” she says.

    Second-generation laws (Copy Cats) = GATCA!

    “Institutions need to think about what they call future-proofing,”  says Chris Tragheim, head of Fatca for Europe, the Middle East and Africa at Deloitte UK. “At the moment we’re talking about the US. There is increased speculation as to whether there will be a ‘son of Fatca‘ elsewhere, and it would be the same sort of questions that clients would have to be asked [as under Fatca]. So it wouldn’t just be relating to US persons, but perhaps relating to people in other jurisdictions as well.”

  20. I think it was Just Me who provided this link to about 400 letters/comments which were submitted to the U.S. or other governments regarding FATCA — http://www.cticompliance.com/fatca_comment_letters.aspx — but I started reading some of them and basically the ones I read were saying, “Please exempt this and that from FATCA because it affects us and here’s our reason why.” Accommodating even some of those requested exemptions would add several hundred more pages to the FATCA regulations. The complexity just seems to grow exponentially. It’s so insane — Pandora’s Box is wide open now. I say kill FATCA, bury that box and let us all live in peace.

  21. Risk.net has sure been doing a lot writing about FATCA.  I guess, since it is directed at Corporate Risk Managers, it makes sense, as they do see the Risks of both compliance and non compliance.  

    Here is their latest you can read via google news.  Short and sweet and if you are clever, you can access their reports too! 

    The new year will bring some dramatic changes – few of them good news for operational risk managers. The US Foreign Account Tax Compliance Act (Fatca), originally set to come into force at the start of 2013, has been delayed – but this isn’t seen as positive by much of the industry, who complain that the advantage of having more time to comply is outweighed by the increased uncertainty and disruption.Our Fatca special report looks at this and other problems surrounding the most controversial piece of financial regulation in years. in the history of the world!

  22. @just me

    What was the name again of that DC based company that does the predictions about what factors are most likely to be the most influential in the following year? I wrote to them some time ago and asked them why they didn’t include FATCA in their predictions for this year (no response). I wonder if they’ve included it for next year.

  23. Don’t think I will re-tweet this one.    

    If you click on the link within it, the Risk.net article will open, or at least it did for me.

    https://twitter.com/CUMicah/status/278921650781687808

    If that doesn’t work, try this PDF

    In this he is talking about the value he sees for the FFIs, but not the value for you, the intended target of this global data collection effort.  

    At the time of its passage in 2010, the Foreign Account Tax Compliance Act (Fatca) appeared to be another reporting requirement for financial institutions (FIs). However, Fatca has long-term benefits for FIs – specifically the ability to streamline and standardise customer onboarding requirements, drive customer experience improvements and, ultimately, enhance profits

    In final analysis, he says…

    Discovering the value in Fatca

    Fatca enables FIs to get out of the compliance business and back into doing what they do best: serving their customers by maximising the value of the customers’ assets. Globally, FIs are only at the beginning of this long journey, but the ones that capitalise on these regulatory efforts and unearth the powerful changes that Fatca can provide will reap the benefits over the long term. 

    So, the Holy grail of “standardizing” means that the same intrusive identifying experience will be extended to all customers, and they will come to expect and love it. Therefore it drives customer experience improvement?  Really?  Boy, is that good spin from the FCC.  

    I think what he is saying that KYC and AML regulations all get rolled into a standardized FATCA compliance routine, and so processing wise, maybe something will be easier for the FFIs and customer expectations.  I guess you have to turn a turn that ‘turd in the punch bowl’ to something positive, and after you spend all the money and effort on the FATCA follies, might as well call it an ‘enhancement’ to the punch.   

    Read it and see if you get a different view.

  25. @bubblebustin

    Not sure which one you are talking about.  Was it a BIG Name?  I vaguely remember something, but don’t recall.  There are a lot of predictions out there.  Risk.net does its, but those are not widely read. I am raking by fading brain for the organization you might be asking about, but can’t come up with it right now.

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