We’re all worried about what will happen to our bank accounts under FATCA, but several commenters here have pointed out that data quality issues may prove an insurmountable barrier to accurate identification of United States Persons. How good are banks at searching through this kind of textual data in order to identify people with connections to a particular country? The Wall Street Journal brings us an example from HSBC, “the world’s local bank”:
On January 18, 2008, for instance, $15,000 that originated in Myanmar was processed through the bank’s U.S. subsidiary, according to HSBC emails included in the Senate report. An email among HSBC’s compliance officers later showed that the payment was processed because it was marked with the city name “Yangon,” instead of the colonial name of the country’s former capital, “Rangoon.” … At the time, HSBC’s U.S. head of compliance requested that the filter be fixed. “We are running too much risk that these misses will cause [U.S. regulators] to start questioning the effectiveness of our controls,” she wrote.
Clearly it’s time to start listing my place of birth as “Saint Francis City, Bear Republic”.
In 2010, two more U.S. dollar transactions were processed and one got through unchecked. In one instance, the bank’s filtering software didn’t catch the term “Burmese” as related to Burma, Myanmar’s alternate name.
The potential demonyms of Americans are even more varied than those of the Burmese/Myanmarese: Usonians, United Statesians, Yankees, Homelanders, et cetera. Or for that matter, why not list yourself as a citizen of the state where you lived decades ago: Californian, Michigander, or New Hampshirite?
In the other instance, the filter “did not identify ‘Mynmar’ as a possible reference to Myanmar,” according to HSBC emails included in the Senate report.
If you don’t have an alternative name for your place of birth, you could always try distracting the bank clerk at a crucial moment so he makes a typo in your records. Possible distractions include loud noises, stupid questions, spilled beverages, or large sums of money. In fact, thanks to typos, some countries don’t even know the difference between FATCA (the Foreign Account Tax Compliance Act) and FACTA, as this hilarious Pravda report demonstrates:
An oft-cited reason for giving up one’s US passport is the US law known as Facta, or the Fair and Accurate Credit Transactions Act … the high cost of compliance with Facta has led many banks and hedge funds in Asia to turn away all American clients, creating insurmountable barriers to banking and investment for numerous American expatriates living and working in Asia.
This could even turn into a vicious downward (upward?) spiral for some banks: denied access to the U.S. financial system, they’ll have no way of paying for the mass quantities of American spellcheckers they’ll need to make sure their records are free of typos. That will result in to an even higher rate of error and further misidentification of U.S. Persons abroad, leading to their continued exile from the U.S. financial system. In the mean time, angry emails from the Compliance Department will stress that it is crucial for the bank to come into FACTA compliance as soon as possible, leading to a massive misallocation of efforts as all the engineers burn the midnight oil trying to ensure that all their U.S. Person customers get one free credit report every year.
Thre chears fore speeling misteaks!