FATCA compliant foreign financial institutions (FFIs), including Canadian banks and investment houses, are required to close “recalictrant” accounts or collect 30 percent Withholdable Payments made to Recalcitrant Account Holders or noncompliant FFIs.
Closing accounts would entail freezing them until arrangements are made for the disposition of the account, be it transfer or whatever, at which point 30 percent of the assets would be withheld and given to the IRS.
Now, I make the observation that FATCA is US, not Canadian, law, and that FATCA compliance is voluntary. In effect the FATCA compliant Canadian bank or other institution is purchasing access to US financial markets with the assets of account holders.
On the face of it, this appears to me actionable and would lead to perhaps the largest class-action law suits in Canadian history.
I wonder whether anyone has any thoughts on this.