Interesting letter from the Brazilian Bankers Association. If you read through it many legal conflicts not just with Brazilian law but Brazil’s Constitution. In many ways a tougher position being taken than by anyone in the Canadian financial industry.
@tim- this is a piece of work that is worthy of what a citizen and or a legal resident should expect from his/her government. I hope that Canada takes note of this effort.
There is another letter I am going to post tommorrow from the CEOs of Bank of Nova Scotia and Deutsche Bank in Germany sent to all of the G20 Finance Ministers(like Flaherty) and Central Bank Governors(Mark Carney) basically calling on the G19 non US G20 countries to gang up on the US and get Obama to do something on FATCA. There some people in the past saying that Bank of Nova Scotia was seen as “weak” on FATCA so its interesting to see whether there has been a change in attitude at the top.
@Tim, they should have consulted me with their translation. “Money Laundry” – yikes! 🙂 Here, money laundering the #1 concern of banks. If someone doesn’t have a valid visa, or citizenship, they CAN NOT get a bank account here. Doing an interbank transfer from an overseas account to my Brazilian account is extremely difficult, and I never do it. Some years back, I sent a $5,000 wire to my wife from America to pay for legal fees here. The money was “approved” and put into her account *4 months later*.
I would love to be able to say that I feel that the Brazilian government would give the US the middle finger over this FATCA issue, but I can’t because there is “diplomacy”.
Panama had been a concern of the US for many years because someone could use the “bearer shares” to have a fairly untraceable bank account in Panama. The US pushed the “diplomacy” card and now that is gone.
For about the past 2-3 years, I have called/emailed many banks in several different countries. All of them say NO! to Americans with only a blue passport. I find this amazing because I’m not trying to do anything wrong, just have an account for “insurance”, and I’m NOT trying to hide behind a company structure.
Having US citizenship as my only citizenship really sucks in this case.
I can see Brazil is trying to do something. This sounds good to me. I have no idea how Braziian Banks will know about dual citizens and green carders who have accounts in Brazil, They are registered as Brazilians. Besides I don´t believe that these people are tax cheaters. The problem they will have in case they are identified is the paper work that will become endless,,, forms, then more forms, and forms to end up not having to pay anything to the USA. Harassment I would say.
^^ Continued from above…
Even if the Brazilian Bankers resist the FATCA in the beginning, the embassy, IRS, or a seperate team of diplomats could “persudade” (bribe) the Brazilian government into signing on. That’s my fear.
I currently manage a profitable business. (Not in my name though because I don’t want to go through the hassle with the paperwork.) The business is profitable because of *ME*, not for being American, or anything I learned in America. All business operations are conducted IN Brazil and NOT the US. All taxes are paid here, and there are a lot of them.
This FATCA is way above, and beyond what the US “needs to know.” If someone is fully compliant in a higher-tax jurisdiction, they will owe the US nothing anyway. To me, it is the ultimate slap in the face for someone like me who left American because they didn’t like US overreach.
You can be sure of three things:
1) I will renounce because I can’t stand the US government overreach;
2) After renouncing, I will open up several more businesses (in my name), and not 1 centavo will ever go to America. I would rather travel to Portugal to buy things, even though it’s slightly more expensive there than America.
3) I will show all of this to my children, to make sure that they know the consequences of being an American abroad.
4) I will diversify into several different currencies because the US dollar is one of the worst “investments” on the planet.
After reading this letter from the Brazilian Banker’s Association I can understand why no bank in Brazil has taken, or is going to take any action, in closing down accounts held by US persons. The tone of this letter is very conciliatory, but it makes it very clear that FATCA impose obligations on Brazilian banks that violate Brazil’s consisitution and many of its laws. This letter draws a very clear line in the sand. I wonder how many protests like this have been registered by foreign governments and/or banking institutions with the US Treasury Department?
In case you haven’t already seen it, there’s a long list of letters to the IRS from foreign banks etc. here: http://www.deloitte.com/view/en_US/us/Services/tax/ffba750a5bbea210VgnVCM3000001c56f00aRCRD.htm
I read alot of them and some of them are thoroughly annoyed at the type of responses they get back from the IRS.
@Mark, I was told that Dilma has a minister in her cabinet that is somewhat anti-American. If we were able to find a group of people here, who are affected by this, it would make a good story for the media: “Os EUA querem extorquir dinheiro de Brasileiros”.
Imagine if something like that aired on TV Globo!
geeez,
That could indeed be effective. Classifying what FATCA does to Brazilians with dual citizenship and green cards as extortion might even merit the attention of the the US ambassador in Brazil.
It is my opinion that foreign governments taking a strong stand on this matter and proposing damaging retaliatory sanctions is possibly the only act that will open the eyes of legislators in Washington.
By the way, the IRS this morning released its 384 pages of regulations with respect to FATCA.
Here are the links to the just-released IRA FATCA regulations ;
IR-2012-15.doc
248K View Download Remove
REG-121647-10.doc
975K View Download Remove
Thanks Roger! Treasury, IRS Issue Proposed Regulations for FATCA Implementation (IR-2012-15, Feb. 8, 2012); REG-121647-10. I’m in the process of reading it. There’s new categories of “Deemed Compliant” FFIs but I haven’t got to that part yet. I’m on page 34 now. One thing does occur to me:
This is going to be a giant pain in the ass for Apple of all companies, because of all the foreign companies on their App Store (many of which are just pass-throughs for young foreign developers). Apple already has to get W-8s or W-9s from every App Store developer and to spend a lot of customer service time answering questions on how to fill them out. This will increase their burden even more …
I haven’t finished reading it either, but it does mention that FATCA imposes costs on FFIs. I don’t think that it would be unreasonable for foreign governments to insist the the IRS and reimburse then with the funds to pay for these costs. Banks don’t provide services “at cost” either, or they would not be in business.
That alone could be the straw that breaks the camel’s back since I suspect that what it would cost foreign FFIs to implement this would far exceed the additional revenues the IRS would collect.
From what I have read so far it still seems to be oriented towards US residents hiding funds abroad without really addressing the issue of dual citizens and those who don’t know they are dual citizens because they happened to have been born to a US parent in a foreign country, or those who “lost” their US citienship many years back through the act of becoming a naturalized citizen of a foreign country.
@Roger & @Mark – that comment would have to be revised though because my wife, at least, thinks that sounds like something related to exports.
It’s no secret that Brazil supports Cuba very much. I know they give them financial dontations. I was told by a doctor here that Cuban doctors can come to Brazil and practice medicine no problem, but anyone else, especially American doctors can not. All of the doctors I know here have very nice lifestyles.
Oh this is cute. “local FFIs” can be “deemed compliant” if they only open accounts for residents of the “same country” (p60). Actually this is probably good for all the Canadians and EU people around here. Hong Kong on the other hand is probably screwed because of the perverse way the IRS defines “same country”: they claim that China is a different country”, meaning that pretty much no Hong Kong bank is going to qualify. But it’s hard to tell because they don’t give a definition of “resident”.
geeese,
It is very difficult for Cubans to legally leave Cuba; particularly trained professonals like doctors. Cuba, however, does allow and there is a rather large group of Cuban doctors in Venezuela providing medical services to the poor there. They Venezuelan government pays Cuba in the form of petroleum it ships to that country, so that a significant part of the their “renuneration” goes not in their own pockets but to the Cuban Government.
My wife and I visited Cuba about 4 years ago, shortly after this program had started as part of a mission activity of the church which we attend. It was fully licensed by the US government so we were not violating any of the US laws that restrict US citizens from traveling to Cuba. I discussed this program with the pastor of the church we were visiting and he confrmed that “some” of the medical doctors in his congregtation had gone to Venezuela. I asked him if they had gone on a voluntary basis and his reply was “not really,” Doctors are carefully selected by the Cuban government and apparently have little choice if so selected.
I am aware that a few of those who have gone to Venezuela have managed to “disappear” and re-appear in the United States after having crossed a border of an adjacent country and “finding their way” to the US. It would be interesting to learn more about Cuban doctors in Brazil.
@markpinetree- it is what I would call emotional abuse. I would also characterize these reporting forms as being nothing less than stalking.
In the old Soviet Union it may indeed have been hard to get permission to leave the country and for certain classes of citizens, Jews, it was well nigh impossible unless you could get the West to make it an issue. In the case of the U.S. even though you can move away you cannot escape being followed and punished for being away.
So what you end up with is a distinction without a difference.
omghe’sstillanamerican- it is the classic case where you have one party that is trying to argue rationally while the other party is being totally irrational. It is ironic that in this situation it is the non American countries who are actually being faithful to American Constitutional values.
@eric- I wonder how the U.S. believes that any of this differs from the old South African pass system which required the native Black population to show that they had the right to be out of their government designated area?
@RogerConklin
There is actually something called the “dusty foot” policy a pun on the whole wet foot dry foot policy where basically Cubans who are intecepted at sea are sent back to Cuba whereas those who make to Florida are allowed to stay. The dusty foot policy applies to Cubans who sneak into Canada or Mexico by sea or air and then find their way to the nearest US land border crossing to claim refugee status under the Cuban Adjustment Act. There was a recent incident in Vancouver where two members of the Cuban National soccer team got away from their minders at the hotel they staying at in Vancouver and simply hailed a cab for the nearest US border crossing. Within a few hours of being processed in Blaine, WA their were at Seattle Airport waiting to board a plane to meetup with their relatives in Miami.
http://www.theprovince.com/sports/Cuban+defector+describes+escape+from+Vancouver/6051949/story.html?cid=megadrop_story
I’d personally like to hear from someone *in the government* say why US Citizens abroad are expected to file more information, and pay more in taxes to America than US residents, even when we use no services from there.
Is that our “duty” for having a US passport? Personally, I will breath a sigh of relief when I have a different passport because I feel like the US passport is a bullseye for trouble!
@ Eric Ha ha for Apple. I don’t like the app store and that is sort of funny (if I didn’t disagree with the FATCA). I once bought an app from their store–the one single time I bought anything. I used my US credit card. They quoted me US price, but then charged me Canadian dollars themselves, and then my credit card charge me an exchange too (CDN-US). So having paid the exchange rate twice, and $1.00 app cost me like $1.50. That made me really sorry that I ever bought an app and I haven’t bought any apps since.
They want to control everything, so now they have to do all the paper work.
@geeez,
I think that the reason the US is requiring all of this extra information from US citizens living abroad, (as well as those in the US who have foreign accounts), is that the general assumption, with no basis in fact, is that the only reason a US citizen would ever live abroad is because he is a criminal tax evader who deserves to be caught and punished. The often cited phrase is: Nobody else would ever want to live anywhere but in the USA as is evidenced by the millions of foreigners who are tring to get into this country,
I always love pointing out that there are millions of foreigners trying to get into Singapore, Saudi Arabia, and Russia too. Lands of the Free!
@tim, under the Cuban Adjustment Act which was enacted in 1964 after the Bay of Pigs fiasco, Cuban citizens who touch dry land in the US (which includes Puerto Rico) are automatically granted asylum. And that includes those who walk across the border from Canada or Mexico and simply present documentation that substantiates they are Cuban citizens.
Within a few days they are issued US Social Security numbers and are legally employable in the US, and after one year they are eligible to receive permanent resident “green cards” and are on their way towards the 5-year residence requirement to become naturalized US citizens. There is a thrifing business of what are referred to as Cyotes who pick up Cubans who arrive in Mexico from Cuba who are paid rather handsome fees by Cuban relatives in the US. The Cuban Adjustment Act was enacted under president Johnson somewhat as repentance for the US failure to support the Bay of Pigs fiasco after having led its leaderes that they would have full support from the US in attempting to overthrow the Government there. Regrettably it does result in untold lives being lost by people who launch themselves into the sea on rafts and small boats that are not seaworhy, only to perish. It acts as incentive by rewarding Cuban citizens who are successful in entering the US illegallhy without either a visa or a passport. (And unquestionably there are some others from other nations who use fake professionally prepared identity documents that deceive immigration officers into believing they are Cubans when they are not.)