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.
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 – Don’t leave home without it!