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.
Here goes:
“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…
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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!
Of interest?
“France’s New Bank Reform Law Paves Way for FATCA Agreement
“A new French bank reform law promulgated on July 26 introduces measures to implement international agreements for the automatic exchange of tax information that are currently under negotiation — notably, the intergovernmental agreement with the U.S. to implement the Foreign Account Tax Compliance Act.”
http://www.lexisnexis.com/legalnewsroom/tax-law/b/newsheadlines/archive/2013/08/01/france-39-s-new-bank-reform-law-paves-way-for-fatca-agreement.aspx
Money. Is there some reason you are not listening? You don’t have to do anything- zilch-nada-bugger all.
You are not a US person. Without a TIN or SIN the IRS computers have no idea who you are. They don’t care .
They cannot/ will not do anything to you. The Canadian institutions have you down as a Canadian. Sit back, relax, forget you even started to read this site. Since you won’t believe me, this will be my last response to you.
Looks as though I’ll have to sign, seeing that I’m a US person with only PR status in Canada. Just add my name to the upcoming class action lawsuit. :^(
But what the hell am I going to do about it anyway? Go back to the US to open up an account? Yeah, right! LOL
Meanwhile, my wife is safe. All joint accounts have been closed in advance thanks to the information that I’ve found here. It’s just another reason to become Canadian, and then relinquish the US citizenship.
My question is: So what are the credit unions doing?
Let’s watch mattress sales go through the roof…:P
For general information. I asked a TDCanada Trust bank manager several years ago, when opening a new account, about what happens to the copies of the IDs I had to present to the bank. I was told that they are kept for a very short period at the branch and then shredded. Before shredding, the branch will record what type of ID was presented and any identifying # such as driver’s license #.
I have no idea if there has been any change in the procedure since then.
The manager was not aware of TD Waterhouse’s policies in this regard.
For anyone without a driver’s license or other official photo id, most provinces issue ID cards, mostly used by young persons to prove they are of drinking age. Old folks can get them also.
As usual there are some typos
there has been no change IN the procedure
For anyone without a DRIVER’S license
@Hazy
Did you read the credentials of the authored article above? (wording was pretty clear)
PS – it is a paperless society, photo ID’s are scanned and databases maintained…
The point of the article was to highlight “IF FATCA were implemented, what would the banks be required to do? and how will that impact you?”
@The_Animal,
i believe the credit unions are doing what the banks are doing, albeit a bit more reluctantly.
Exceptions might be the ones with less than 175 mill in assets. I know of two of them in the city I live in.
@Benedict Arnold be me
It’s unfortunate what happened to you. Fortunately there have not been too many similar reports.
The question you bolded is something we all would like to know. I think that there will be confusion among bank/brokerage employees when and if a Canada IGA comes into effect.
I started a thread at Maple Sandbox for people to relate their experiences and help monitor any changes in documentation requirements.
http://maplesandbox.ca/2013/my-financial-career-a-fatca-chronicle/
@ Marie
I was surprised to read your comment that taking one’s name off a joint account would force the sale of all securities.
I checked with my own bank owned brokerage firm and was told that this would not be the case. What would be required is that a visit should be made to your bank branch and a new account could be set up in a sole name. Journal entries would be made to transfer the investments over to the new account.
No sale would be involved.
Anyway, that what I was told and what I believed to be the case. Perhaps others have been told something different.
I sent the Jatras interview on ‘Rolled Back Deadline of FATCA Gives Critics Hope’ to Kevin Shoom. Wasn’t sure if he had seen it. He responded within 48 hours with ‘Thank you for sharing this with me. Please accept my best wishes’.
hazy You are correct shares can be transferred ‘in kind’ without triggering a sale.
What about this case?
HIGH COURT OF JUSTICE
68 O.R. (2d) 379; 1989 Ont. Rep. LEXIS 206
RE VAN DEMARK ET AL. AND TORONTO-DOMINION BANK
http://uniset.ca/other/cs6/68OR2d379.html
They can take 30% of US based income under FACTA but drop those investment
http://www.bcbusiness.ca/finance/us-tax-laws-the-long-arm-of-uncle-sam – Article from BC Business. Write in and tell them what you think.
@AtticusinCanada
Re: removal of name from bank account for FATCA reasons
I ran into the same situation with CIBC. I initially made my request via Online Banking and received a form letter stating that they don’t remove names from accounts. I phoned into Telephone Banking and was also stonewalled. I had to walk into my local bank branch and speak with the woman who opened the account in the first place.
The reason the bank refuses to remove your name from a joint account is that it apparently violates Privacy Act; your name is no longer on the account, but you still know about the existence of said account and account number. This is why the preference is to close the joint account and open separate accounts if an account is going from joint to single.
My contact at the bank branch took pity on me for my situation and decided to remove my name from the account in CIBC’s system, in violation of the bank’s official policy. The bank CAN take your joint account and make it a single account, but they don’t really WANT to. Maybe try complaining to someone else or escalating the situation to Client Care? I wish you the best of luck.
@AtticusinCanada
If I were you I would threaten to pull all the business from the bank, in particular the mortgage. The mortgage is where the bank makes the most money off you. Maybe that will get them to listen.
@Hazy and
@Duke of Devon
Thank you for the information re: removing one’s name from a joint securities account. I am certainly going to look into this. Removing my name without triggering a sale of any securities would be a great option for me and my Canadian husband. Cheers!
@The_Animal
Thank You for posting that link….great read..
@Calgary411, @USCitizenAbroad
Could that link be appended to the headings?…I see they highlighted the concern of forced redemptions of RRSP’s…I think it is a good summary of what one can expect once one has no bank one can deal with…
http://www.bcbusiness.ca/finance/us-tax-laws-the-long-arm-of-uncle-sam – Article from BC Business.
@Marie,
You need to look into it with more than the financial institution. It is also necessary to consult your tax accountant. If both spouses have been reporting a share of the ‘income’ and/or capital dispositions from the account, then changing the name on the account will, in fact, result in what the CRA refers to as a ‘deemed disposition’ for the person whose name is removed.
TD Canada should be charged under the Banking Privacy Act, and shut down as a financial institution.
Did the TD waterhouse client have a US$ account.
@money
I am not sure what you are asking…but since I am the subject in question I will answer this way…
Bear in mind, I am a naturalized canadian as of 1967 (pre 1986 changes) and pre-April 2nd, 1973 when the OATH still included a renouncement of allegiance to other states…
NO..TD Canada Trust accounts had no US$ accounts involved.
YES..TD Waterhouse accounts had $US margin accounts opened as would any Canadian TRADER using options strategies and pre-market trading…
NO…TD Waterhouse should not have marked the TD Canada Trust accounts as “US Online Banking”
In the same vein, what would it matter if I had Japanese, Euro or Swiss franc accounts?
I can see where TD Waterhouse, being registered in the US, would require knowledge of US Citizens. However I question the whole process of being categorically assumed to be a guilty of being a US Citizen and placed in a position of unwarranted risk when it comes to light that I am a Canadian through and through…Who is going to compensate me for the inconveniences, added costs, and perceived persecution as well as potential release of private information (including my canadian born wife’s) to otherwise unauthorized entities…?
I don’t understand something here. I thought RRSP accounts were exempt from fatca reporting.
Anyone?
Benedict Arnold
1) Do you really make money day trading or do you arbitrage?
I think it was US online banking that caused the problem. This should have been corrected right away and your assets should have been unfrozen