About four weeks ago, I sent an email to Canadian Bankers Association (CBA) on Blaze’s behalf, forwarding to them under my real name an email she had written (from which I had stripped her personal identification). Blaze posted their reply to my email (which reply was really a reply to Blaze’s email) in this thread.
After receiving CBA’s reply to Blaze, I sent a lengthy reply to them. Earlier today, I received a short reply to that missive, from the same CBA official. This latest reply seems more sympathetic to our concerns, in tone and wording.
To give you the context of their reply, I am attaching the wording of the email to which the reply is addressed. I had included as attachments to that email: a copy of the 1980 DOS letter that Mr. Ladybug received (posted elsewhere on this forum); the post from Ladybug that explains the context of that DOS letter; and a copy of an email that I sent to Jim Flaherty when I forwarded both the DOS letter and Ladybug’s background post to him. I also attached a copy of Flaherty’s letter to me confirming that the OECD Treaty that Canada signed in November will NOT invalidate the protections offered to Canadian citizens by Article XXVI A 8 of the Canada-US Tax Treaty (posted elsewhere on this forum).
I am posting this latest correspondence from CBA, in fairness to them and because it has a different tone from my previous correspondence with them. I will not speculate as to whether this different tone signals a difference in what may happen in 2013 when the IRS asks Canadian financial institutions to implement FATCA. Nor will I speculate about what might have sparked the difference in tone.
This is the reply to Schubert from CBA Director of Media Relations, March 12, 2012:
We understand and agree with the concerns you have with FATCA and we certainly agree that the vast majority of Canadians swept up under FATCA are not tax cheats. We use the definition of “US persons” that the US government has used in the regulations but understand that many of these people may not have had any ties to the US for many years.
We will continue to try to resolve the problems we see with FATCA and thank you for your on-going efforts to do the same.
“Best regards.”
Schubert’s (much longer) March 3 email to CBA, to which the reply was addressed:
“First, let me thank you for your prompt reply to my email of February 18. I have forwarded your reply to my friend.
“I am somewhat encouraged and impressed by the depth of the points raised by CBA in the submissions to the US Treasury officials which you copied to me. However, I still must say that I am disturbed that, if necessary, your member institutions are prepared essentially to throw their so-called US person customers under a bus to protect the majority of customers. While I can understand this from a narrow business standpoint, I guess, it seems to me that this kind of discriminatory behaviour is precisely what Article 15 of the Canadian Charter of Rights and Freedoms is designed to prevent. That Charter is supposed to protect all Canadian residents, never mind citizens.
“What particularly concerns me is the continual reference to Canadian citizens and residents as ‘US persons’ because they were born in the US or had US parents. Most of these Canadians have in many cases never lived in the US, have no substantive economic or social ties to the US, or who upon becoming Canadian citizens decades ago believed (correctly under US law at that time) they had thereby lost their US citizenship and hence have no tax-filing or tax-paying obligations to what is now for them a foreign country. A country whose rights of citizenship they have never claimed or exercised since becoming Canadians. For such persons to be submitted to FATCA reporting decades after they stopped being Americans would be an outrage, not only to them, but to every non-US-related Canadian to whom I’ve spoken about this issue.
“The vast majority of Canadians likely to be swept up under FATCA are NOT ‘tax cheats.’ They have faithfully paid their taxes to Canada, to their province, and to their municipality — those governments of where they actually live, work, and from which they actually receive benefits and protections for which taxes are supposed to be paid. I think it highly unlikely under current QI agreements and other banking laws and the tax treaty that any true “’US-person tax cheats,’ essentially US residents who are trying to hide some of their US income from the IRS, actually have any accounts in Canada. As Minister Flaherty has so eloquently pointed out to the IRS, Canada is not and has never in living memory been an even-remotely-plausible tax haven for Americans or anyone else. People who have banking and investment accounts in this country have them for the legitimate reasons that they live, work, save, invest and retire here. And not in the United States.
“I am attaching for your information an email and attachment that I sent to Jim Flaherty last Monday. I have also copied this material to my MP, the NDP foreign affairs and finance critics, and a prominent cross-border tax and immigration lawyer who has handled hundreds of recent US renunciation and relinquishment cases.
“I have long been aware of the problems identified in my email, but it was not until last weekend that we had posted on the internet an actual copy of the US State Department letter that was sent to some (but not most) former Americans who became Canadians back in the 1970s and early 1980s. I myself received a similar letter in 1976 (which alas I didn’t keep), and consequently I, like the addressee of the attached document, have a certificate of loss of nationality of the US. Very few people like us have such a document, through no fault or oversight of their own. As I mention in my email to Mr. Flaherty, this raises some serious legal questions about whether such persons should in fact be considered ‘US persons’ even if they lack a certificate of loss of nationality, which most of them would have received if (for reasons unclear in the case cited below) the US State Department had been aware of their becoming Canadians.
“I know several Canadian citizens who don’t have certificates of loss of US nationality are already seeking legal advice on a possible Charter or other legal challenge against any eventual actions against them by Canadian financial institutions under FATCA.
“I don’t think anyone relishes spending money, time and energy fighting these issues in Canadian courts. But such litigation will almost certainly happen, if people like my friends are told they have to agree to waive their privacy rights and have their financial information shared with the IRS, never mind have some portion of their money confiscated and remitted to the IRS. Such actions would not only violate the Charter, they also would violate the Canada-US Tax Treaty, which as Minister Flaherty has said specifically exempts from collection in Canada any alleged US tax liabilities incurred by someone in Canada who was a Canadian citizen at the time of the alleged liability, no matter what other citizenship that person may or may not hold. That treaty also prevents information-sharing with the US that would be in violation of Canadian banking and privacy legislation. And I received in early February a personal, signed letter from Minister Flaherty confirming that the OECD treaty, which he signed on Canada’s behalf in November, will not change this exemption, because on ratification Canada will “reserve against” Articles 11 through 16 of that treaty. I am attaching for your information his letter to me, which he sent in response to concerns I had expressed about a possible conflict between the OECD treaty and the Canada-US tax treaty. (I have shared copies of this letter with my MP, Paul Dewar NDP, and with the NDP foreign affairs and finance critics.)
“FATCA is a very complex and thorny issue for Canada, Canadian citizens, and Canadian financial institutions, as well as for other countries and their citizens and institutions. The fight against this US outrage must continue, and I do not believe it useful for Canadian sovereignty, law, and justice to cave into this. Some things are more important than profit. I hope that you and our government can come up with some resolution of these matters that protects the rights of ALL Canadian citizens of whatever place of birth, parentage, or dual citizenship (whether real, or alleged and not real).
“As I note in my closing thoughts to Minister Flaherty, the resolution of these issues will set a precedent that ultimately will affect all naturalized Canadians of no matter what origin, if FATCA is allowed to proceed as seemingly intended. The political, as well as economic, consequences of these issues not being resolved properly, would be profound and far-reaching.”
Finally, though I won’t include here the full text of the email I sent to Flaherty and forwarded to CBA, here is the final two paragraphs of that email, to which I refer in my final paragraph to CBA, just quoted:
“If the Canadian Government submits to US FATCA demands in cases of alleged dual citizenship, this would set a profoundly disturbing precedent for all naturalized Canadian citizens, no matter what their original nationality. Today the United States makes these demands under FATCA; what happens tomorrow if other countries make comparable demands? What then becomes of Canadian sovereignty and the protections of Canadian citizenship on Canadian soil?
“I insist that my federal government take all steps under Canadian law to protect all Canadian citizens from such FATCA outrages. The Government of Canada must prohibit Canadian financial institutions from giving ANY foreign government (including the US) financial information about any Canadian citizen. This must apply regardless of a citizen’s birthplace, parentage or alleged additional citizenship.”
Dare we hope that CBA agrees with those last two paragraphs as well? They haven’t come out and said so bluntly in public. I wish they would. But the reply I got didn’t rebut or argue this point, either.
I think there may be some benefit in continuing to lobby Canadian Bankers Association on these issues.
@all
My apologies for the length of this post, which is very long considering the brevity (this time) of the CBA reply that I got. But in fairness, I think you need to see what they were replying to, and what concerns they said they share. That’s in fairness to them as well as to you.
… also I made of point of inserting paragraph breaks in the draft before I published, but somehow alas those didn’t all appear above (in fact most didn’t). … not sure why or how that happened. Lashings of apologies for making it harder to read, though that wasn’t my intention and I’d thought I’d fixed that.
Schubert, your unflagging work on this cause is amazing and appreciated — we have all learned so much from you. Thank you.
@ Schubert
It is so great to have you in our corner. Thank you, Schubert
There is going to be a big FATCA Compliance conference sponsored by the Canadian Institute in Toronto on May 30th and 31st at the Yorkville Marriott. Any discussion about picketing etc. Anyone want to contact the Canadian Institute.
http://www.canadianinstitute.com/fatca
As Minister Flaherty has so eloquently pointed out to the IRS, Canada is not and has never in living memory been an even-remotely-plausible tax haven for Americans or anyone else.
Well, Chavez disagrees. That ain’t Hugo or the ghost of César. Just some guy in Toledo named Jon.
http://usxcanada.wordpress.com/2012/02/12/2012-feb-12-chavez/
Well considering that Canada and the US already had an agreement in place to report US residents’ bank accounts in Canada, it would take a pretty dumb criminal to choose Canada as his tax haven.
@Tim: Thanks for posting that. Whether CBA’s tone has or hasn’t changed, Canadian Institute certainly seems to be gearing up for compliance with FATCA. No mention of how they plan on doing that without violating Canadian law.
I wonder if they would like to have Issac Brock as their keynote speaker.
@Blaze
I got a copy of their PDF summary. Essentially the advice is to break Canadian law and eat whatever fines are imposed by Ottawa.
@Everyone
Does anyone know how to get a PDF up to WordPress. I got these bastards red-handed saying they are going to break Canadian law. Are Canadian bank executives stupid for thinking no one would ever find out about this?
Stephen Harvey VP of anti money laundering compliance at CIBC Bank and Maureen Bell VP of compliance at CIBC Bank you deserve to rot in a “Canadian” jail.
It’s time to put the pressure on our politicians to stop this in it’s tracks. Maybe the government should impose jail terms for white collar crimes of this nature.
Here is a quote from the seminar information sheet:
In Canada, banks follow federal know-your-client (KYC) rules set out in anti-money-laundering (AML) legislation as well as the Access to Basic Banking Services (ABBS) regulations, which outline what type of identification is required to open a bank account. FATCA identification requirements are expected to be inconsistent with those standards, and FFIs will have to ensure their processes meet FATCA standards. In this valuable session, you will find out how to:
•Bullet-proof your forensic fraud analysis and reporting systems to meet the higher FATCA standards
•Know Your Customer: Managing increasing controls and costs to prevent identity theft and comply with the various (and sometimes competing) regulatory requirements:
◦Special considerations when dealing with U.S. citizens
◦Identification requirements and proper validation of ID when entering new relationships to ensure compliance with all of the various requirements
◦Catching up to technology
Tim – How to upload pdf. You know how to post. Get into posting mode, look in the space between title window and body text window, find the “upload/insert” phrase, click on the first of the three icons (camera+music note), then smell your way through the rest of the process. It is not intuitive that pdf gets treated like media!
I’d love to see the pdf.
By the way, I think we sometimes focus too much on people who thought that had lost their US nationality long ago. There are also many people who know that they still have US nationality but refuse to be double taxed of FBARed out of commission. FBAR is not only a general warrant against the 4th, it is also impossible to comply with because of confidentiality owed to spouses, family members, and business partners. Double taxation makes it harder, sometimes impossible, for families to make ends meet. If the person is tax compliant where they live, and if they have little US income or are tax compliant with respect to their US income, they are not tax evaders. US law cannot apply to them and any official who participates in the foreign country in double taxation or FATCA is committing treason, regardless of US or local legislation. I know of no single case where a constitution (charter of rights, etc) has been modified to accomodate FATCA. Parliaments and administrative officials in some countries have been clearing the way for FATCA, but every single one of them is a traitor and must be thrown out of office (example, a majority of the Swiss parliament http://isaacbrocksociety.com/2012/03/06/img-srch/ )
@Tim: I hope you can get the pdf uploaded so we can all see it.
If the banks start demanding the information, then we may have grounds for a lawsuit–in addition to the fines they seem to be willing to pay.
This is why I asked Minister Flaherty to make a statement that Canadian banks must adhere to Canadian law–and that the government has no intention of changing the law.
Thanks Schubert for all the time and effort you have taken to fight FATCA. I was surprised to learn from my bank manager on Friday that she had never heard of FATCA and couldn’t believe it was possible that the U.S. could impose such a requirement. Perhaps there is resistance to implementing FATCA in the timely manner outlined by the IRS.
@all, Today I was at CIBC to close a account. I asked one of the tellers about FACTA, he said what in the world is that?? He has been at the bank for about 5 years now and after I told him about it, he said well that is not going to fly.. He said there will be too much Politics involved. He said I just can’t see that happening..
You would think that employees would have heard something about it by now, if it was going to happen. Unless they are told to keep quiet about it.. Who Knows!!
@Baird68 & @saddened123
I don’t think alot of “front line” workers such as bank managers and tellers know much ifanything about FATCA. Just like alot of the general population, people it won’t effect so even if they see a headline, they either skip the article or skim over it; file it at the back of the brain where it may or may not come to the surface. I think this is actually human nature. Most of my friends, even after I have told them about it said to me, “oh, I don’t think that will happen – sounds bizarre”. Even my older sister, who lives in the U.S. said, when I told her, “Well, we read the Wall Street Journal, and I haven’t seen anything about it”. Unless you are affected (as all of us here on Isaac Brock have been), you either ignore it or put it aside.
*What it doesn’t cover, is the plight of the actual Canadian citizen spouses who hold joint accounts with their American spouses. What about THEIR privacy? If my wife ends up with our account information plastered to the IRS…where is MY privacy as a Canadian citizen (born and raised in Canada to two Canadian Citizens and with no tie to the United States)? Are MY rights not being trampled on by the IRS? Would I not have a legal leg to sue both the Canadian Bankers Association and the IRS? And believe me, they do not want to tangle with me, because I’ll make their $250B potential loss sound like PEANUTS compared to the lawsuit that I’ll stick them with.
The Canadian Institute has another 2-day FATCA conference scheduled for the end of October. The agenda is a little scary. http://www.canadianinstitute.com/2013/416/fatca-compliance-solutions/agenda
Day 2 includes:
“FATCA will require that financial institutions provide client account information on individuals that are identified as U.S. persons, even if they are also Canadian citizens and Canadian residents. This has raised significant privacy concerns in Canada and in other countries. In this session, you will learn how to effectively comply with FATCA disclosure, without sacrificing your domestic privacy obligations.”
“In what circumstances will the IRS be flexible and not force closure of an account for non-compliance?”
Come on! How can the IRS “force” closure? They have no legal power in Canada. This is insane! I guess there’s not much doubt that our banks will, indeed, sell us down the river.
Offensive too: “What methods are available to help monitor Canadian citizens
who might be subjected to FATCA?”
@Outraged: The banks CAN’T close our accounts in Canada for refusal to provide information on place of birth or refusal to provide consent to release information to IRS.
I think the post you made is posturing by Canadian banks as they prepare for FATCA. They really are caught in the middle. That doesn’t mean we should be prepared to let them violate our long-standing legislated rights.
We are so fortunate to be in Canada and not in Europe, Asia or South America, where accounts are already being closed (or being refused opening) in some instances just because of a misfortune of birth in US.
It is important we keep reminding Canadian banks (and politicians!) of this. I have alerted both my bank and CBA of this fact.
In fact, according to a letter from TD, a bank can be fined up to $200,000 for closing a Canadian account without cause (i.e. the customer committed a crime against the bank). In addition, that TD letter also said the bank would be required to immediately reopen an account.
Of course, TD has closed the accounts recently of some Iranian-Canadian citizens, but that seems to relate more to the transfer of funds to or from Iran in contravention of the economic sanctions.
I have made sure my bank, CBA, Financial Consumer Agency of Canada and others know I won’t hesitate to take legal action if they attempt to ask me my place of birth or request consent to release information to IRS. I also hope Canadian Civil Liberties Association and Canada’s Privacy Commissioner will support us in this. I have been in touch with both of them. (See other threads for information). .
*I sent this post to my MP Craig Scott.
Consider doing the same…
@Blaze, you’re an inspiration!