We have one more indication of FATCA causing problems for U.S. citizens in Canada. The first involved a bank account with the Royal Bank. In this case the RRSP account of a Canadian resident was frozen because she was suspected to be a U.S. person. We now have more indications of trouble …
What follows is a comment that appeared on July 9. It is significant because it demonstrates how serious the hunt for “U.S. persons” will become. Look around they are everywhere. Who knows, maybe one of them can be your retirement plan.
“Why is it that local banks are totally unaware of FATCA?”
I can tell you (as I am a recently retired investment adviser from a Major 5 bank)..
They haven’t built it into their compliance yet as they are not operating officially physically as an entity in the US (they have subsidiaries like BMO Harris, which wouldn’t backtrack up to the parent). However over the last decade compliance departments have been gradually requiring Passports or 2 forms of Photo ID as a measure of Identification…some forms I used to see are now requiring Passports where none was there before and all ID’s need to be updated every 5 years…
Where I ran into the problem of FATCA personally was when I retired last year and moved my personal Investment accounts to TD WATERHOUSE as I also had bank accounts at TD and wanted to use their self-service investment trading systems…Because TD Waterhouse is registered IN THE US…It’s compliance department seized upon my Canadian Passport showing a US place of Birth…That it turn triggered them to FREEZE my accounts until I signed a “W9″ and a “Limitations of Benefits” form.
The W9 is a Taxpayer Identification Number form TD Waterhouse Form 2 – Have a look at these forms.
The Limitations of Benefits is a Waiver of Client Confidentiality TDWaterhouse form1
I immediately told them I had no SSN and wasn’t a US Citizen and they had no right to provide any information on my accounts (now affecting my banking accounts,as well, as they were tied to the trading accounts for cash transfers) to the US as this would be a breach of the client confidentiality act…(besides it would include my CANADIAN born wife’s affairs as well)
They explained to me that the TD Waterhouse was required to do this as they were REGISTERED in the US and were subject to substantial US penalties under FATCA…
I had them transfer my accounts back to my original bank…and only allowed them to deal with my Canadian-Born wife’s “personal single named accounts”…Meanwhile, they are waiting for me to provide proof of my Loss of US Citizenship before they will happily transfer in my accounts…Thus my journey into the CLN search to which I had to educate myself and my Lawyer…
Why is this significant? What are my fears?
If and when FATCA is implemented, I would be worried about having my accounts frozen…(or being forced into signing the WAIVER of CLIENT CONFIDENTIALITY which is just one step closer to being a “recalcitrant”)
If my accounts were frozen; besides the ability to pay bills from pension payments and other resources, I would have my RRSP and TFSA frozen from trading (increasing market volatility risk), lack of access to funds, and possible forced redemption which would incur immediate taxation with Revenue Canada as the RRSP proceeds distribution would be considered Taxable Income in the year incurred.
These repercussions would be significant. Until such time of acquiring the necessary CLN to prove non-US Citizenship, one is exposed to a status of being in LIMBO as well as additional Canadian taxable implications. So far the process has taken from Nov 5th, 2012 to the present and still waiting resolution/delivery of a CLN.
A CLN is priceless! For everything else there is Mastercard.
A CLN – Don’t leave home without it!
No one knows anything for sure, because our wise government has not told any of the sheeple yet (all in good time), just the ‘financial institutions’ because they need to know so that they can change their ‘systems’, and they – so far – have been whining a lot louder than the mosquitoes.
Safe bet though, is that if you are going to have money in a compliant FFI, keep it in a registered account for now. Better bet, put it in a ‘small, deemed compliant’ credit union, failing that, I hear Sears has a back-to-school mattress sale going on.
Sorry, Benedict, I had been away and missed your request.
This was the subject of a previous post: Don Whiteley in BC Business — THE LONG ARM OF UNCLE SAM
There were no comments to the article in BC Business and comments may or may not still be accepted as the great Don Whiteley piece is now dated — but absolutely still relevant.
BC Business Contact US page says:
When I look at requirements for opening accounts in a Canadian bank, they usually say 2 pieces of identification such as driver’s license. They do not yet require you to show a passport so they should have no information on your birthplace or have any reason to ID you as a “U.S. person”, right? I don’t know if my current bank has this info. (I don’t remember what documents I showed when I opened the account or if I filled out any forms asking place of birth) so I am thinking of transferring my accounts before July 1 to another back, making very sure this time that I don’t provide any information that has place of birth.
You are correct in some respects…However I only have 2 formal pieces of PHOTO ID…Drivers licence and Passport…(I don’t think a Costco card will cut it 😉
As it turns out, I did transfer my accounts to Scotia Bank Itrade with only a drivers licence and avoided the question of birthplace…HOWEVER, IF FATCA is made law in Canada, the banks are likely to request a PASSPORT or birthplace…then there will be a mad scramble.
In the meantime, I have procured the COVETED CLN so I have crossed the Rubicon…However, I will continue to resent the TD Waterhouse for siding and imposing a US LAW in Canada when a Canadian Citizen should be protected from extra-territorial persecution by laws that are not Canadian for now…The fact that Canada would bow to such US laws is like imposing the Second Holocaust on its own citizens…
They may be required to ask for a passport once acta comes into effect, but they haven’t in the past and don’t currently so I’m thinking current accounts will not be “findable” as they won’t have any “indicia” that could let the bank know you were born in the U.S.
If you read closely, current accounts are scheduled to be brought into compliance within a year as per IGA outline…
p.s. in addition to driver’s license, banks usually accept provincial health cards or even a credit card as a 2nd piece of ID…neither of which have birthplace.
I retired from a BANK investment owned firm after 30 years…I know how COMPLIANCE is changing within the industry and it is getting more restrictive including updating ID documentation every 5 years…
Do what you wish, but I for one do not take this lightly…
Well asking every Canadian who has a bank account to produce ID proving where they were born is going to be a logistical mess…many Canadians don’t have passports, many don’t have an easily accessible copy of their birth certificate. This would mean that potentially millions of people will be forced to dig out documents to show birthplace in order to comply with a foreign law. I can imagine how that will go down politically…facta hasn’t caught most peoples’ attention yet but when and if this starts to happen, it will surely become a political issue. Plus, there’s the constitutionality of all this.
I am not here to argue this…I will tell you that every year I was required to take a COMPLIANCE course and test that every bank employee and teller is required to take and it included a section on money laundering…I didn’t consider my position to be that of a police informant, but essentially every bank employee is bound by the terms to do just such a thing and subject to penalties…(PS I was not a teller ;)…it isn’t farfetched to expect them to screen for citizenship or other INDICIA…Even the new Canadian Tax laws now promote informing on your neighbour…(pretty much sounds like NAZI Germany to me)
I understand, my point is that surely Canadian legislators or courts will have to step in to limit this at some point, because it is going to cause headaches for millions of Canadians beyond those that happen to have some link with the U.S. Or even U.S. courts for that matter…the law if supposed to crack down on “offshore tax evasion” and that clearly does not include Canadian citizens doing day to day banking at a bank in their own country, with their Canadian earnings.
Had this piece of disgusting garbage come across my Yahoo internet browser. Edited it to make it more accurate.