Following in the grand media tradition of running biased reports about old news in an attempt to generate a feeling of consensus and progress about the issues of the day, Hong Kong’s Headline News — one of the half-dozen Metro clones you can grab for free to read on the train to work — printed a FATCA article this morning, apparently apropos of nothing. There’s no new developments to report, so they just repeat the same old half-truths in an increasingly skewed manner.

The article features interviews with diverse sectors of society such as banks and tax consultancy firms. Only a few unimportant voices are missing, such as the government bureau which is allegedly supposed to be formulating the policy response to FATCA, or accountholders who might be affected. Unfortunately it’s the first news we’ve seen here in months, so I’ll translate it anyway as part of the ongoing project of Kremlinology in trying to figure out what exactly my adopted hometown’s response to FATCA is going to be.

Oh no! Banks face increased costs? We must do whatever it takes to save them! We can’t do something so inhumane and cruel as making them write letters to all their customers asking them for permission to send their data to a foreign country! The fact that this recycled, no-news article is headlined with this crucial piece of information about banks’ costs hints at the real reason this story is probably being written: to establish a fake consensus for ripping down our privacy laws to prevent banks’ costs from rising. I guess we can’t expect much honesty or editorial independence from free newspapers, who are under heavy pressure to please their only paying customers — the advertisers.

Right now, pretty much no one in Hong Kong is paying attention to obscure privacy law issues like this, due to the legislative elections coming up next Sunday — which are dominated by local problems like school curricula and rising housing costs. The banks’ game plan seems to be to build up a facade of public consultation about FATCA, and then ram the relevant privacy law amendments through the legislature as quickly as possible in October while the new delegates are still trying to find their desks and preserve their political ammunition for matters of larger importance.

The ridiculously biased language in this section should tell you whose water this newspaper is carrying if you hadn’t already figured it out already. “Concealing” (隱瞞) U.S. taxpayer status? What a load of rubbish. Under the existing “Qualified Intermediary” standards, banks do not have to waste time demanding nationality documentation from people who have the right of abode in Hong Kong and show their Hong Kong Permanent Identity Card at account opening. Before 2000 they did not even require right of abode; any German, Pakistani, or Mauritian living in Hong Kong under a student, dependent, or employment visa could open a bank account without having to provide their passport to fulfill Washington’s demands. The horrors!

When I first came to Hong Kong I opened up a bank account this way. It was at a simple local bank which didn’t offer any U.S. brokerage services or whatnot, so they were shockingly bound only by local law, not by U.S. QI standards. I picked them because they had an ATM near my apartment. I did not “conceal” my U.S. Person status (unless you count the fact that I was wearing pants, which covered up my “property of U.S. government” tattoo); I gave the bank all the documentation they wanted and answered every question they asked of me, and they gave me a checkbook and an ATM card. Back in those innocent days neither of us imagined that a government on the other side of the planet had anything to do with the transaction.

Really? Who are these “others” who are taking such a weird step like painting a target on their backs and announcing themselves to their banks, and what fines are they worried about? Why didn’t Headline News interview some of them? In reality, the U.S. has no laws for fining you if you don’t tell your bank about your citizenship, or for that matter if you decide to move your account to a non-FATCA-compliant institution (Carl Levin’s best efforts notwithstanding). The only fines the U.S. can impose are for not filling out Form 8938 or one of their other dozens of stupid forms, which is a matter between you and the IRS and has nothing to do with telling your bank about anything.

And nor can the U.S. collect any fines in Hong Kong: there is no tax treaty, and anyway none of Hong Kong’s existing treaties call for mutual assistance in collection, least of all against residents of Hong Kong in relation to their Hong Kong-source income. We firmly observe the common law “revenue rule”, and thanks to Basic Law Articles 106 and 108 that situation is not likely to change any time soon. And of course Hong Kong itself does not have any of its own fines for people who do not comply with FATCA, any more than we fine people who travel to Abkhazia in violation of Georgia’s travel ban or who spread religion in violation of North Korean law.

More likely the “fines” are part of the banks’ own contingency plans if they’re faced with the unthinkable situation that the legislature will not tear up our Personal Data (Privacy) Ordinance and allow them to send information about Hong Kong people’s finances out to whatever random foreigners ask for it. If that happens, they’ll have a giant “recalcitrant account holder” problem. Presumably their “solution” is to impose random service charges on uncooperative customers who ignore or refuse to respond to letters and phone calls demanding they fill out Form W-8 or W-9, until those customers get sick of the harassment and close their accounts “voluntarily”.

As noted previously, Secretary for Financial Services and the Treasury K. C. Chan lived in the U.S. for a long time and may be a former U.S. Person. Let’s hope he’ll at least stop to think of his former fellow U.S. passport and green card holders before he jumps at whatever plan the banks here come up with to dump all the costs and harms of FATCA compliance onto local Hong Kong taxpayers and bank customers. The Hong Kong Association of Banks is a statutory corporation, meaning it’s theoretically set up to serve the interests of society at large, rather than society being set up to serve its interest …

Of course, while financial institutions in Hong Kong have significant influence in the government just like in most developed countries, here there’s another force for them to contend with: Beijing, whose opinions our local government officials will at minimum solicit and study when it comes to matters affecting foreign relations. Mainland China has been notoriously tight-lipped about exactly what it will do in response to FATCA, making only vague noises about “promoting financial market stability” and finding “an opportunity to discuss China’s concerns”. Like others have said here, the U.S. will lose a lot of credibility and momentum on FATCA if it doesn’t get the “BRICs” on board, so likely not just Hong Kong but many foreign governments are waiting for Beijing to tip their hand before publicly committing to their own response.