The majority of RBC clients are not U.S. persons and, in most cases, FATCA should have little impact. If you have an existing account and there is an indication that you may be a U.S. person, or if you are opening a new account, RBC may ask you to provide additional information or documentation to demonstrate that you are not a U.S. person. (link mine)
From the RBC’s FATCA page.
Hat tip: Suki
Time to get in touch with Abby Deshman adeshman@ccla.org
at the Canadian Civil Liberties Association.
Societe Generale has also published FATCA Q&A on their website (found them in English)
http://www.sg-securities-services.com/en/regulatory-watch/fatca/what-will-change-for-clients/
http://www.sg-securities-services.com/en/regulatory-watch/fatca/actions-taken-sgss/
http://www.sg-securities-services.com/en/regulatory-watch/fatca/fatca-faq/
Note the last FAQ:
“What happens if US persons are identified during the client identification process?
If an investor refuses to provide the necessary documentation to prove whether he is US or not, 30% on all withholdable payments to him will have to be withheld. If he provides all relevant documentation and a waiver to disclose, his data will have to be reported to the IRS. If there is sufficient documentation to prove that he is US and does not provide a waiver, or he wants to be withheld, his account will have to be closed – provided that this is in line with local law.“
So, basically they say that they won’t even give the user the choice to be withheld if they can legally do it. How can they possibly legally discriminate against USPs and close their accounts?
How can they believably assert “The majority of RBC clients are not U.S. persons and, in most cases, FATCA should have little impact” without already having collected the information, processed all the account files, and established the status of their clients?
So, they counsel their fellow citizens – don’t worry, it’s only those ‘US persons’ we’re going to discriminate against (note the undefined which we know includes ex and current green card holders, and possibly other non-US citizens).
This is deliberate and disingenuous – in order not to sound the alarm amongst their clients and either lose them, or alert them to complain to the Privacy Commissioner and make all this more widely known.
No surprise here. This is to be expected of every Canadian bank, insurance company, and investment house. By all means alert CCLA.
Canadian banks know it’s against the charter to discriminate based on nationality. They have teams of lawyers. Why would they put such thing on their web site, if it wasn’t already cleared by the government and that they have the assurance that they won’t be sued. It doesn’t make sense.
*The last FAQ states,
“What authority does RBC have to provide my account information to my local tax authority or directly to the IRS?
RBC will only disclose account information where you’ve provided your consent or where required by law, such as disclosure for tax purposes to the local tax authority (e.g. Canada Revenue Agency).”
So they need permission or an IGA that gives them permission? My head is spinning…
Quite frankly, I’m about as intimidated now by my Canadian bank and my Canadian government as I was when told by a US Border Guard that the next time I entered the US it was to be with a US passport — and subsequently entered myself back into the USA.
As most of us are aware, the Canadian Bankers Association has had something similar up for months:
http://www.cba.ca/en/consumer-information/40-banking-basics/597-us-foreign-account-tax-compliance-act-fatca-information-for-clients
They also state that “The majority of Canadians are not U.S. persons and, in most cases, FATCA will have little impact”, which Badger has so aptly pointed out is an attempt to soft pedal this witch hunt.
A recent change to the CBA’s page is the thoughtful links to the IRS.
@Suki Mills, Haven’t we all signed something like that anyway in the fine prints we never read when we opened bank accounts?
*The cost of this compliance is said to be $20-$50 per year per account holder. How will the bank finance these costs?
We don’t call FATCA a slow moving train wreck for nothing. It’s starting with new investment accounts but within a couple of years will include ALL accounts – there will be no place left to hide. And, yes, the banks and our own government will use a divide and conquer strategy, one that pits U.S. Persons against “real” Canadians. Seems to me something similar happened in a former country called Yugoslavia.
Email send to Jim Turk, Executive Director of CAUT.
turk@caut.ca
http://www.caut.ca/pages.asp?page=148
Jim Turk is Executive Director of the Canadian Association of University Teachers. Prior to his work at CAUT, Jim was an Associate Professor of Sociology at the University of Toronto, specializing in Canadian Studies, and was Director of the Labour Studies Program at University College. Jim has also been Director of Education for the Ontario Federation of Labour. He is a member of the Executive and of the Board of Directors of the Canadian Centre for Policy Alternatives; a member of Advisory Board of the Ontario Institute for Studies in Education/U of T; and a former chair of the Ontario Coalition for Social Justice. Jim received his Ph.D. at the University of Toronto, his M.A. from the University of California at Berkeley and his B.A. from Harvard University. He was a Knox Fellow at Cambridge University. His most recent book is an edited collection, The Corporate Campus: Commercialization and the Dangers to Canada’s Colleges and Universities.
The fact that the CBA provides direct links to the IRS really irks me. While they attempt to soft pedal FATCA to its non-US customers, they’re unapologetic to their US ones. Here’re the links, go and deal with it. The direct links really drive home who their masters are, at least to me.
@SwissPinoy
I would imagine those compliance costs wouldn’t vary one iota whether the customer is US tax compliant or not, and wonderful (not) for the banks is that it will be ever expansive and in perpetuity! I can see Dr Evil laughing right now!
*Move monies to Credit Unions. QUICKLY!!!!
Thanks for keeping up with that newest development @bubblebustin,
The CBA is creeping towards formally consummating their till death do us part relationship with their new best friend – the IRS. At the expense of all Canadians -whether duals or residents, or Canadian citizen friends and families of US persons. Pitting banks and financial advisers directly against their account holders – and all the Canadian taxpayers who will be funding this through our taxes and through account fees passed along to everyone -not only those deemed “US persons” by the IRS.
If/when an FATCA IGA goes through in Canada, we will all remember and publicize that the CBA and associated investment bodies were complicit, and could not be bothered to put effort and money into fighting it tooth and nail to the end and alert their account holders and fellow Canadians to do the same – but chose to do an end run and advocate for an IGA instead. If there are avenues to explore http://taxpol.blogspot.ca/2013/01/why-fatca-is-tax-treaty-override.html that potentially the status of any proposed IGA would NOT be a valid treaty, and potentially NOT even in the power of the IRS to be entering into with national governments – due to bypassing Congress, it was entirely possible for the CBA and the Finance Department to do the same.
“Seems to me something similar happened in a former country called Yugoslavia.”
The banks are “Ethnic Cleansing” Americans, that is exactly what they are doing!
In some fairness to RBC, at least they have a FATCA web page and it actually contains quite a bit of information, if you read through all the FAQs. Contrast this with TD, which currently offers absolutely no information about FATCA on their various web sites. Guess TD is using the old “need to know” strategy which means almost no one inside the company has been told about FATCA, let alone any of their clients. I put this to the test every once in a while with their front desk staff and they usually give me the same look a cow has right after the bolt has been fired into its head at a slaughterhouse.
*FromTheWilderness, to be fair, the Royal Bank of Canada is only threatening, for now, those who are still Americans to fill out Form W-9. It is only when Americans refuse to fill out W-9 or have tax problems with the IRS, that their local checking account might be closed. This is not as bad as the situation in Switzerland. The IRS knowing who has what is also not necessarily a problem and could be used to combat crime or cause crime. While I never filled out a W-9, I never had an issue with having to do so. So, I don’t quite agree with the idea of the Royal Bank of Canada ethnically cleansing Americans. It is maybe rather America which is ethnically cleansing Americans from other nations or giving itself the potential to do so. More control over the financial data of Americans living abroad makes it much easier for the US government to tax the unrepresented in the future. If you are still an American abroad, then I would expect for the US government to be paying much more attention to your finances in relation to what remains after Canadian taxes and how high it can be fined if you complain.
The main problem, at least for now, is likely that all Canadians will likely have to finance these costs of FATCA. Yet, this is not necessarily bad. Costly investments into IT infrastructures can be positive. Yet, do Canadians need for their financial infrastructures to be modified to ease the sharing of financial privacy with the rest of the world? Probably not. Is this future increased access to Canadian financial data going to lead to security issues? Most likely. I seriously doubt that Eritrea will drop citizenship-based taxation once it has access to the financial data of Eritreans in Canada. The impact that this will have on those Americans in Canada who do not renounce is yet to be seen, but I haven’t seen any indication that things will be getting better.
In order to protect my wife, I am closing my President’s Choice account (it is a subsidiary of CIBC) and moving to CCS. Those of you in BC will recognize those initials. Even though I am fully Canadian, I am taking precautions in light of FATCA, separating our accounts and dropping any “big-bank” accounts. And Uncle Sam can kiss my 195 lb derriere.
And if you weren’t already to pull your accounts from RBC because of their proactive and early embrace of FATCA (as well as their advocacy for an IGA -via the CBA), they’ve just given Canadian citizens and permanent residents another compelling reason to switch to a credit union:
http://www.cbc.ca/news/canada/british-columbia/story/2013/04/05/bc-rbc-foreign-workers.html
‘RBC replaces Canadian staff with foreign workers
Axed employee blows whistle; federal government investigating’
By Kathy Tomlinson, CBC News
Posted: Apr 6, 2013 5:31 PM PT
Last Updated: Apr 6, 2013 8:02 PM PT
Read 3647 comments3647
Thanks, badger.
… and how will mainstream Canadians react when they realize the cost of FATCA to the banks, those costs which will be passed on to all of us? The many comments to reports of the latest RBC happenings certainly indicate that a lot will move their accounts from RBC.
But, of course, we will all be told it is important to have all those US Persons Abroad pay their fair share to the US, http://www.accountingtoday.com/news/Offshore-Tax-Havens-Cost-Average-Taxpayer-Thousand-Year-66282-1.html?ET=webcpa:e6930:241779a:&st=email.
And they are expecting their existing Canadian employees to train the people who are going to replace them? What could go wrong here?
Credit Unions Rock!
“If an investor refuses to provide the necessary documentation to prove whether he is US or not”.
To me, the double Achille’s Heal to FATCA is that it becomes the responsibility of the bank customer to prove he is “not” a US person. How does one go about proving this negative??? How do you prove that you didn’t stay a day too long in the US, that you aren’t a green card holder or haven’t become a US citizen? The Department of State is going to find themselves very busy issuing letters stating that someone is not a US citizen or green card holder. The other fatal flaw to me is, in order for FATCA to be something other than a sham, the banks cannot be negligent in ferreting out ALL USP’s. I brought this point up to my bank manager the other day. She listened as I told her that many people born in Canada are US citizens because one of their parents was. I asked her how the bank can say they’ve properly vetted for these people when their birth certificate says they’re Canadian. She seemed to understand the problem.
BB you apparently haven’t read the proposed regs and are spreading paranoia. The bank is only obliged to do an ‘electronic’ search for US ‘indicia’. Finding none, the account is OK.
RRSPs and other registered accounts will be exempt.
How many times Oh Lord?