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.
@Tim
The latest FATCA regulations (which have not yet been signed onto by Canada) state that FFI’s must do an electronic search for any U.S.indicia (unless the account is greater than 1,000,000 then a manual search would also have to be done). Should any U.S.indicia be found (such as U.S.birth place), the client will need to be asked if they are a U.S.person. The definitive proof would of course be a CLN and for that reason alone, I might be forced to apply for the CLN. However, I agree with Omghe above that your Canadian passport proving citizenship in Canada, along with perhaps a signed copy of the oath you took plus any and all info re pre 1986 INA, should suffice for your bank. As one friend of mine, who is a lawyer but not an immigration lawyer or a tax lawyer, stated: The Banks have to follow Canadian law not U.S.law and if Canada says the facts show you have relinquished your U.S.citizenship, then the banks better believe that. They would be leaving themselves wide open for a law suit.
@tiger
I agree with what you saying. However, all I am mentioning is the rep from the Canadian Bankers Association that responded to Blaze is saying that when push to shove given the economic imperatives of being able to access US markets they will have no choice but follow US Law instead of Canadian law(Its not a question of Canada “approving” the proposed FATCA rules. Canada isn’t going to be asked). I do not believe the CBA is making a proper determination of where their loyalties should lie. Its not even a question of requiring a Canadian passport under current Canadian law they don’t need anything more than a Canadian drivers license or social insurance card. I strongly believe that without changes to present law ALL Canadian institution will be FATCA NON COMPLIANT and subject to witholding. Thus the key thing is to fight any changes made by parliament to present Canadian law to legitimize FATCA and if the the banks break Canadian law to make sure those violation are prosecuted to the fullest extent of the law.
Sorry to drop in like this, but I’m trying to find a short response I wrote today to @rivk88 but connot find it anymore.
Can someone help me.
Thanks.
oops a typing mistake, it was @rivka88
@Tim,
Okay, I see what you mean. CBA is basically saying “we might not like it, but we may have to throw you under the bus”. I do feel that Flaherty is doing his best to negotiate a “deal” that Canada can live with – whether those of us posting here will be able to live with it, only time will tell.
@hijacked2012
One more thought on the pre 1986 “relinquishment” of U.S.citizenship. You might recall that Steven Mospick posted some time back that basically any of us who became citizens of Canada “in the 60’s, 70’s and 80’s” and had no contact with IRS since that time, would be foolish to “throw a bunch of tax returns at them….. and make their day!” Perhaps Steven is aware that pre 1986 expatriating acts, meant citizenship in the U.S. was “relinquished”. Just a thought!
@Greenwood
go to the forums
find one of my post
click om my name
follow directions to create a private message
@tiger
There are a couple of broader issues that the CBA response to Blaze did not pick up. For example about 30 to 40 percent of Canadians do not have passports are they all going to need ones to open up bank accounts and show proof of Canadian nationality just to make the US happy. Given many in this group tend to be lower income, elderly, or youth I wonder what the NDP is going to have to say about this along with other groups that advocate on behalf of lower income Canadians. As Steven Mopsick has pointed out there has actually been very little change in FATCA since it was first proposed by Obama’s Office of Management and Budget back in 2009. I am not sure what type of deal Flaherty can cut other than complete non compliance by Canadian Institutions. I do think it would be very difficult for Flaherty to negotiate something if he said Canada would not comply under any and all circumstances so I do understand they need to be somewhat accomodating towards the US. I’ll explain later but I don’t think FATCA non compliance by Canadian institutions as outrageous as it seems.
@Tim
I renounced March 1, and received a copy of my oath. It is essentially a prelianary divorce decree from the US. the CLN being the final decree.
I will open new bank account tomorrow, banks are required to ask place of birth for new accounts.
Will present my CDN passport and the copy.
will let you know what they say.
@rivka
Present Canadian law does not allow banks to ask for place of birth. If they ask you that they are breaking Canadian law RIGHT NOW. All you need is a Canadian Drivers License and Social Insurance Card. A Canadian passport works too but is not necessary.
Check out this link for more information
http://www.fcac-acfc.gc.ca/eng/resources/publications/banking/TSOpenBankAcc-eng.asp
Effectively under FATCA the US is demanding everything on that website link above be changed or else every Canadian is going to get charged thirty percent witholding on US source income
@rivka88
I’m so null at this. Do you mean I shouls click on «Isaac Brock Forum» and what then ?
Tim I believe you are frightening people unnecessarily. Their bank shouldn’t know where they were born. If they ask, we should tell them it’s none of their business. If they ask our citizenship, we should say “I’m Canadian’ If they some how have your US birth place and you have been here before 1994, tell them ‘I am no longer American” Accounts under 50k and RSPs,RRIFs, and TFSAs are exempt under the current draft regulations. The banks do not yet know what they will have to do but canadians living in Canada should have no trouble with FATCA. A lot of people are jumping the gun here.
@Greenwood
You need to join the forum
go to the very top of the page
click on “How to Join this Blog”
follow instructions on join forum
@KalC
I do not believe that RRSP’s and RRIF’s are exempt under the current draft regulations. What I was told by a Senior VP of a Financial Institution was that RRSP’s, whereby no beneficiary of the account had a greater than 5% holding would be exempt. In other words those RRSP’s that today are being used by many smaller companies, private schools, many businesses in Canada as a “Pension Plan” for their employees ie a “Defined Contribution Pension Plan”, would be exempt, just as, pension plans will be exempt. RRSP’s held by individuals for themselves will fall under the rules of FATCA.
@KalC
Sorry, I am trying not scare people. I was just trying to give advice to Rivka88 who believed that banks were currently required to ask for place of birth that in fact they were not and there was no good reason to volunteer that information. You really shouldn’t even have to volunteer citizenship. I don’t believe at the present time anyone has anything to worry about in terms of opening a basic banking account the law in Canada is quite clear and I don’t believe any bank would not follow it.
@rivka88
I have gone up to step 4 , I’ve click on forum and then that is where i get lst.
@rivka88
I have gone up to step 4 , I’ve click on forum and then that is where I get lost.
@Tim
I have checked requirement for opening a bank account at two chartered banks and the CBA
guide to opening an account in Canada.
They are permitted to ask biirthplace.
Greenwood I had trouble at step 4 too. I did eventually get a login (took me several days) but have never participated in that forum.
@Greenwood
you need to enter the password
from paragraph (4)
rivka88 They may be permitted but you don’t need to tell them. You can open a bank account in Canada with a driver’s licence.
@omghe’sstillanamerican
Makes me feel better. I can go as far as step 4, then I click on «our forum» and get this blue list.
Then I don know what to do.
I just tried logging into the forum using my new reset password and it didn’t work. After 8 attempts it told me I have to wait 15 minutes to try again. I don’t know why it’s so damn hard. I give up.
@rivka88
OK but where do I enter the pass word
@rivka88
The main governing body for all of this is the Financial Consumer Agency of Canada. I posted a link below to their website below. I personally I have never been asked short of idle chit chat about my background(and have never actually given where exactly I am from). FCAC has a toll free 1-800 number you can call.
http://www.fcac-acfc.gc.ca/eng/resources/publications/banking/TSOpenBankAcc-eng.asp
And this is specifically off of TD Canada Trust website
http://www.tdcanadatrust.com/accounts/pdfs/basic_banking_services.pdf
TD Canada Trust according to the above states at that prospective customers must verbally give name, address, date of birth, and occupation. No mention of birthplace.
Exact text from TD Canada Trust:
Verbal disclosure of the following information, if not included in
the identification** presented: name, date of birth, address and
occupation.
Many years ago the CBA drew up its own guidelines on opening accounts but since 2001 have been supersided by those of the Financial Consumer Agency of Canada