I just came across this article http://blog.kpmg.ch/financial-services/switzerland-is-moving-towards-fatca-implementation/, I don’t recall if anyone has brought this particular article yet, but I wanted to share my thoughts on it for comment.
What I find most interesting is the following, suggesting that the banks do not need to be cancelling or refusing accounts of recalcitrants (as I have argued following my posting of the 21 June Swiss Confederation press release):
Implications for insurance companies
The issue around exiting recalcitrant account holders (i.e. a cancelation of a life insurance policy is not possible) seems now to be addressed. However, Insurance companies might now be faced with group requests under the “administrative assistance” (Amtshilfe) and need to prepare for that accordingly.
Implications for banks
Similar to the insurance companies neither an exit of a recalcitrant account holder nor the withholding on proceeds is anymore required. However, Banks will as well potentially face more group requests under the “administrative assistance”. The introduction of a layer of countries that are now entering into intergovernmental agreements will add another category of FFI’s, which in practice will increase the complexity for implementation…
The article also mentions the Swiss government waiver of Art 271 CPS (Illegal acts for a foreign state) in order to enable data transfer, but from what I have heard the banks have to inform the account holder before transferring information, and that the holder can lodge an appeal against the “Amtshilfe” request.
Also, I do not believe that the Confederation can waive 271 CPS in such a critical matter without the approval of the sovereign people as Art 217 CPS was designed inter alia to enforce the constitutional mandate that requires that the Confederation defend the sovereignty of the nation, and the rights of the people (Art 2 CFS et al).
The “Last in Time Rule” upheld by US courts means that even the already shoddy tax convention with the US that we have can be retroactively and unilaterally modified by a subsequent change to the Internal Revenue Code. This means that Art 271 CPS, and other protections are required in order to apply the constitutional guarantees of “Protection against Arbitrary Treatment”, Arbitrary Treatment being one of the nasty effects of the “Last in Time Rule”.
I would ask the Confederation to explain what the “waiver” of 271 CPS actually means. Does it mean that the banks can act directly upon US requests without a proper Amtshilfe request under the Hague Convention (a dangerous precedent which could open the way for US government extraterritorial meddling in further matters that have nothing to do with USP tax issues?) Or does it merely mean that the banks cannot be criminally prosecuted if a request is properly made through Hague Convention central authorities (typically the Swiss Federal Office of Justice and Police or the Cantonal Prosecutor’s Office) , the client properly notified, appeal not lodged or rejected?
The KPMG article appears still to be open for comments, and the article was in English, so this might be a good place for many of us to ask questions and share our opinions. I know that KPMG has a huge market share of the compliance market and that some of you may want to shun the big “IRS-Accountancy-Compliance-Complex” (pls read as parody of Military-Industrial-Complex) but the market share, power and influence of KPMG on some of their large clients is all the more reason to take the debate directly to them.