A reader of Isaac Brock sent me the following letter:
It’s time for your organization to start standing up for your customers on this issue. You can do much more than encourage the Government to sign onto an egregious foreign governments demand (IGA) to throw Canadian sovereignty out the window to simply protect your members bottom lines.
There comes a time when every person and or organization has to take a principled stand and now is that time for your organization. When the government of Canada says no to signing onto an IGA, which would be tantamount to political suicide, it’s going to land squarely in your court. Are you going to compromise the rights of your loyal customers to respond to what amounts to IRS extortion? Do you think your members and shareholders would support a strong, principled, well funded resistance? Absolutely, once they know the facts. Get the facts out there. Spend some of our money edifying people on this issue. Use the press, use your members resources like the annual rational for increasing fee structures.
It is what it is: The school yard bully wants your lunch money. How do we instruct our kids to handle bully’s? Bully’s don’t expect a fight. It’s time you guys gave them one. It’s time you guys gave something meaningful back to your loyal customers and helped the government of Canada on this issue. Stand up and show some courage and initiative.
I’ll be the first one in line to sign onto a class action if any of my banks ask me where I was born. I’m a Canadian ….end of story.
[Name withheld by request]
The banks want the IGA for two reasons:
1. They know that without an IGA they will be in violation of a number of Canadian laws if they comply with FATCA; and
2. It is in their business interests to comply with FATCA. To put it another way:
It helps the banks to hurt Canada.
There is far too much focus on lobbying the Government of Canada against an IGA and far too little pressure on the banks. The banks should be targeted for lawful but visible protests. In fact the Isaac Brock Society should have a separate page for each bank which will then be used to make comments about that specific bank.
The banks have demonstrated that they are the big problem.
I think the author has a good point (which I put in bold face in the letter): It is a violation of the Charter of Rights article 15 for the banks to comply with FATCA, IGA or not.
They should operate in the fear of lawsuits. The bank protest is a good idea.
This is an excellent letter. If the person gets any reply from CBA, I hope he or she will share that reply with us.
I think USCitizenAbroad’s suggestion for a separate page, or thread, for each Canadian bank, is a great idea. I think credit unions should be included in that, if any of them start asking “the question.”
We’ve already heard that some investment firms in Canada are asking the question. On the Sandbox site I recall there was one firm I think in New Brunswick, I don’t know its name and I don’t recall that it was mentioned. The question was, if I recall correctly, and open-ended one with a blank space, worded “is there any reason the US might consider you to be a US person?” The individual reporting this, who has a CLN (of which the agent he was meeting with apparently was aware) asked “should I say no?” and was told “say not applicable.” (Another possible reply, though not one perhaps likely to avoid a “recalcitrant” rating or a rejection of the account application, might be “how the hell should I know what ‘the US,’ personified by whom or whatever, thinks about anythi ng?”)
Scotia iTrade has been asking the following question on its on-line account application form:
“Are you considered to be a US person?” with a drop-down menu of choices. Interestingly, the first and only negative choice available is “not applicable” followed by a lot of other choices. I’ll leave for the gentle reader to ponder the wisdom and utility of asking that particular question the way they did … and how a given reader might choose to answer it. “Not applicable” being the very first choice, strikes me as an appropriate reply for a very large number of persons. Regrettably, “none of your g*******d business” is missing from the selection.
It isn’t just about chartered banks; it’s also about investment firms and brokerages. However, I’m not sure whether the brokerage and investment houses are legally obliged to accept your application, subject to credit approve, the way I think the banks are. Maybe someone more familiar than I (which wouldn’t be hard) with our laws governing various financial institutions in Canada could comment on that.
“Not applicable” seems to be the way the FI is allowing you to say “no”, without actually saying “no”. The only real possible answers are “yes”, “no”, or “don’t know” (although I do like “none of your g*******d business”, and “how the hell should I know what the US …”). “Not applicable” doesn’t answer the question, and could in fact be interpreted in a number of ways (e.g. “I’m a Canadian citizen and resident of Canada, opening a local bank account in Canada, where I live, with a Canadian bank, so this question is ‘not applicable'”).
Repost as per Schubert1975’s suggestion:
FATCA TRAC has been implemented in one of the leading banks of North America. Another leading bank in the Middle East has signed up for this solution and there is a pipeline of closures in Australia, North America and the Middle East.”
Want to guess that “leading” North American bank is a Canadian one?
– See more at: http://www.cio-asia.com/tech/industries/qa-addressing-the-myths-about-fatca/?page=2#sthash.Z5pxkXo6.dpuf
Opening a second front on the banks is a very valid point. In fact, just as in Canada, we are seeing the banks in other countries (noteably in Asia) also adding questions regarding ‘US Personhood’ and denying access to those that answer ‘yes’. The banks have taken it upon themselves to initiate ‘FATCA Compliance’ on their own likely out of both fear and pushing by the Compliance Industry.
A year ago, we opened an account at Scotia McLeod. Our advisor was well aware of the situation. When it came time to sign the application he had already filled in ‘not applicable’ in the space for possible other citizenship. DA,DT.
@tdott and anyone else
You got it. “Not applicable” is the way to go. If the IRS doesn’t know what that means, let them figure it out.
Plan A: Ask a stupid question; get a stupid answer … Plan B: Ask the question the IRS wants you to ask; find yourself in the mother of all class-action law suits and consumer boycotts. Plan A makes more sense to me, and probably also to the FFIs … Look for more stupid questions than you ever imagined.
When asked a vague question, answer the question you want them to have asked or give the answer you want to give them. I learned that from advice given by a very experienced lawyer, on how to handle oneself on cross-examination when giving testimony in court.
@KalC Let’s hope there are lots more sympathetic bank employees like the one you found. I know of a few such folks here in Ottawa, but I’m not about to name the banks in a public forum. We need all the secret friends we can get.
The IRS and the US are broke; they can’t afford to look over the shoulders of, or audit the actions of, every FFI employee on the planet. For them to claim otherwise is utter BS; for anyone to believe they can, is terminal paranoia.
Does anyone else remember Thoreau’s “Civil Disobedience” and Alinsky’s “Rules for Radicals”? If you aren’t familiar with these, get the former from your library and the latter you can just Google and download. Brilliant. Ghandi had some good ideas along these lines too.
Love this letter. If anyone needs contact information …
Director, Media Relations and Communications
Canadian Bankers Association
Tel: (416) 362-6093, ext. 338
Cell: (416) 918-2777
Remember this thread?
And if the IRS finds out about the existence of the US person and their accounts through other channels? What happens to that bank/bank person when the IRS determines that they haven’t done their due diligence? Zingo! Automatic withholding on ALL monies paid to that bank until that bank can review all of their customer base that was screened by that individual, once they’ve determined it’s not a systemic problem within the bank.
A chain is only as strong as its weakest link.
On the question of investment houses and brokerages
This is an interesting area. These institutions, as I understand it, are regulated provincially, having a number of consequences.
First, as they are regulated at the provincial level, the Government of Canada is not in a position to engage them in a IGA.
Maybe a year ago, I investigated the situation in Ontario. The Ontario Securities Commission is a crown corporation charged with regulating capital markets in Ontario. I recall from a phone conversation that an investment account is based upon a contract between investor and investment company which can be terminated by either party.
I think it should also be noted that the canadian population count is 35 million. Of those, 1 million are said to be american “persons”. Thats a pretty large head count when it comes to canadian revenue! Other countries have far less US residents so the financial losses are less. These people are easier to throw under the bus. But how will Canda function when such a large percentage of their general population are considered taxable to America? And that money flows out of the canadian government coffers and into american treasuries?
Another way to communicate with a Bank is directly to the Board of Directors. For example, this from TD Bank:
“To Communicate with Independent Directors
Shareholders may communicate directly with the independent directors through the Chairman of the Board, by writing to:
Brian M. Levitt
Chairman of the Board
The Toronto-Dominion Bank
P.O. Box 1
Toronto, Ontario M5K 1A2
Or you may send an e-mail c/o TD Shareholder Relations firstname.lastname@example.org. E-mails addressed to Mr. Levitt received from shareholders and expressing an interest to communicate directly with the independent directors via the Chairman will be provided to Mr. Levitt.”
Another possibility is a shareholder resolution on FATCA to be presented at the annual meeting. Most banks have their annual meetings in the Spring. Shareholder resolutions usually have to be sent in months ahead of time. As far as I know, by sending in a resolution, a dialogue with the company will open up. Companies really don’t like shareholder resolutions, but are mandated by law to put them before the shareholders. The company will likely try to persuade the shareholder to withdraw the resolution.
A standard resolution could be presented to each bank for consideration.
Scotiabank is on line to implement FATCA through the FATCA Trac system, and who they hired to do it:
Business System Analyst
Public Company; 10,001+ employees; BNS; Banking industry
October 2012 – April 2013 (7 months) Toronto, Canada Area
– Implementing FATCA Compliance initiative at Scotia Bank’s Canadian Retail banking system
– Analyzing and interpreting the FATCA regulatory requirements, interacting with various business groups within BFSI, understanding the implications of FATCA and performing impact analysis, effort estimation.
– Planning and defining the project scope and create detailed business requirements document (EDD ) for Retail business banking FATCA implementation project. Conducting walk-through sessions with various stakeholders to facilitate sign-off process
– Leveraging existing systems, customer data (MDM) for developing FATCA release implementation road map.
– Developing use cases, defining & documenting user procedures and workflows
– Integrating technical solutions with business environment, recognizing systems design and data inter-dependencies and re-usability.
– Leveraging FATCA TRAC (SATYAM DION Tool) to implement FATCA internal reporting requirements, designing USE cases for TRAC case management system
YOu can remind them that the employees of the bank could easily spend 3 years in a USA prison
Unless any contract with USA is completely valid and unless such contract would explicitly nullify such a US law, the US law below would be intended to be enforced upon Canada. In fact, by any nation signing and ratifying any such IGA, these penalties ought to have been brought into their laws.
“Any person who willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter; shall be guilty of a felony and, upon conviction thereof:
◾Shall be imprisoned not more than 3 years;
◾Or fined not more than $250,000 for individuals ($500,000 for corporations);
◾Or both, together with cost of prosecution.
No tax deficiency must be shown in order for the Government to succeed in its prosecution. All which must be proved are the elements of the offense. The essence of the statute lies in the willful falsity of a statement.
The FAQ here focuses on false certifications made by Responsible Officers. It can apply to any false document certified under penalties of perjury such as Forms W-9, W-8IMY, W-8BEN, W8-BEN-E, W-8EXP, and W-8ECI.”
Then you can tell them that there are high-priced consultants available who give week long instruction courses on how white collar criminals should behave in order to make it through their prison sentences.
@ Canadian Brockers: you give UK USPs hope-UK was one of the first to throw UK USPs under the bus with an IGA. . I wish I had your courage and moreover I wish i had your energy. Keep up the great work. would not it be FAB if the 250K USPs in UK including BoJo could do the same protest at Parliament Square ….. we can dream
Dear name withheld by request,
We are very aware of the concerns that you and many others have about FATCA and have corresponded in the past with followers of the Isaac Brock Society and Maple Sandbox. You should know that the banking industry in Canada and around the world shares your concerns.
We have general information about our opposition to FATCA here:
The CBA and banks in Canada have been standing up for bank customers and voicing concerns with FATCA for a number of years. We have raised our concerns with the IRS, the U.S. Treasury Department and the G7 both directly and through our membership in the International Banking Federation. You can find more information here:
We also went to Washington to meet with IRS and U.S. Treasury officials and Canadian Embassy officials. Last year, the CBA also made a presentation in Washington at public hearings before Treasury and the IRS and our president spoke out against FATCA in speeches in Calgary and Vancouver as well. Here are the links:
We submitted an opinion piece with our concerns about FATCA to the Washington Post and the Wall Street Journal. It did not get published.
In Ottawa, we have raised concerns with officials from the Department of Finance, the Minister of Finance and the U.S. Embassy. Finance Minister Jim Flaherty has supported our position and expressed his own concerns publicly and we appreciate the support from the Minister and his officials.
Unfortunately and despite worldwide efforts, U.S. officials have no intention of repealing FATCA. So, governments around the world have decided that developing bilateral intergovernmental agreements (IGAs) with the U.S. is the best way to ensure that the domestic rights of their citizens are respected while still sharing relevant taxpayer information bilaterally. Once the Canada/U.S. IGA is finalized, it will be reflected in Canadian tax law and financial institutions will have to abide by these requirements.
We believe this is the best approach and support the government’s actions because the alternative would potentially expose Canadians to punitive U.S. withholding taxes on income from their investments, including retirement income. The IGA should avoid that and ensure that Canadian law is respected. Until the IGA is made public, we won’t know exactly what the final requirements will be for financial institutions and their customers.
We hope this information is helpful.
The Canadian Bankers Association
The CBA keeps saying they disagree with FATCA and then they say in the next breath, we believe agreeing to an IGA is the best thing to do. Complete idiots. The best thing to do is say no, we won’t implement FATCA because it is a US law and we are not in the US, where in Canada. And we won’t withhold 30% either, again
because it is a US law. When you disagree with something you don’t turn around and say lets implement it.Why doesn’t Canada come out with a law that says any Country that withholds 30% tax on any Canadian financial Institutions we now have a law that states we have to Withold 35% from that Country . That way Canada would make 5% off of the US for every time they withhold any money. And make the law state that the 35% has to be withheld first before any 30% from the states has to be done.
you may say, you just can’t come with a stupid law , but the answer is yes you can. That’s what the US did to the world and they say yes it’s stupid but do it anyway because we want to steal your money to pay off our debts.
@ Canadian Bankers Association
First, thanks for coming here to address the IBS community. It would be great if there were an ongoing dialogue. Second, a disclaimer, I am not Canadian. I live in the UK which has already been steamrolled and where 1/3 of the top 30 brokers have already implemented blanket bans on US citizens as customers, even for accounts which are not FATCA reportable (Individual Savings Accounts (ISAs) and pensions).
I would like to understand, given the global nature of the finance industry, if there is a world forum (OECD, WTO etc.) where the rest of the world could lodge a complaint or file a law suit against the US on any number of grounds. Why hasn’t this occurred? Why does the global finance industry have to spend $100s of billions of dollars implementing a system that can only ever benefit one country and who expects a paltry $800 million per year from the rest of the world’s efforts? The cost to UK FFIs of the ongoing compliance cost (after a significant reduction with an IGA and excluding the billions spent up front) is estimated 20-25% of the US’ expected revenue. That’s one country with 1/5 the number of US citizens as reside in Canada. It is insanity. You might as well just burn the money. It seems to me that the world would be much better off if the FFIs were able to use those $100s of billions to repair their balance sheets, offer slightly more attractive interest rates, make their depositors’ capital safer or make loans to stimulate their local economy.
While I appreciate that you have “raised concerns” and submitted comments, the quote from Mr. Hannah in his May 2012 remarks to the IRS and Treasury suggests that the CBA hasn’t put up much of a fight (if any at all) against FATCA: “Finally, I want to highlight the proposed intergovernmental agreement process that the U.S. Government has embarked on with several European countries and, we hope, with many others. As we stated in the comment letter, the CBA is a strong supporter of this process and would like to see similar arrangements for Canada and many other countries. The CBA and many other commentators have said that FATCA is, at its heart, an information sharing arrangement and therefore is best addressed on a state-to-state basis building on the tax information sharing mechanisms that are already in place.”
That sounds rather more like a complete an utter capitulation. To date, about six countries have said “yes”, about 190 have said neither “yes” nor “no”. Why doesn’t somebody say “no”?
@ Canadian Bankers Association.
Thanks you for your response; these are my comments.
It is well established in Canada that discriminatory treatment based upon place of birth or nationality is unlawful in provision of services, employment, housing or legislation, especially if the discrimination is harmful.
The Canadian Human Rights Act governs chartered banks in Canada. “Ethnic or National Origin” is a prohibited ground for discrimination. Canadian banks should not be asking their customers where they were born. A key aspect of FATCA – specifically discrimination in banking and finance based upon “indicia of U.S. birthplace” – is currently unlawful in Canada under the Charter and Human Rights laws. Only an act of Parliament can enable FATCA here.
However, a Canadian IGA to enable FATCA would be the first law in Canadian history to discriminate against an entire class of Canadians based upon birthplace. Hundreds of thousands Canadian citizens would be affected by this – including Canadian citizens whose only U.S. tie is place of birth.
A FATCA IGA, would require Canadian banks to treat U.S.-born Canadians as second-class citizens in their own country. If a Canadian law singles out certain Canadian citizens by “U.S. birthplace indicia” – irrespective of economic activity, location of assets, employment, source of income, or physical presence – it remains a discriminatory judgment based upon nationality. It is a remote claim based solely on foreign law, and imposes the definitions of a foreign law upon certain citizens of Canada, again based solely upon their place of birth.
Those discriminated against include long-term Canadian citizens and Canadians born in the U.S. while their parents were visiting, or through cross-border hospital arrangements.
Canadians harmed by a FATCA IGA would inevitably would take their case to Canada’s courts. Forcing Canadian citizens to resort to a Charter challenge to resist our own government’s constitutionally unlawful attempt to enforce a foreign state’s ill-conceived and extra-jurisdictional law would be a shameful collapse of sovereignty and moral leadership.
Consider the egregious example: a Canadian born in U.S. hospital because their Canadian mother was referred there due to high-risk pregnancy. A “border-baby” born in a Buffalo hospital to Canadian parents is a Canadian citizen at birth. Yet now this person is victimized by FATCA, even though they returned to Canada within days of being born, and even if they have no economic or residential connection of any kind with the U.S.. FATCA would subject a Canadian citizen to negative discrimination and exposure to harm because they were born in a Buffalo hospital due to medical needs. How can anyone argue for that, and yet claim that “…Canadian law is respected”?
@Canadian Bankers Association: You position remains the same as it has been since the beginning. You are far more concerned about the financial and administrative burdens to banks than you are about the fundamental legal and Charter rights of Canadian citizens and residents.
An IGA where banks report to CRA to report to IRS will not resolve the problems for Canadians. It still violates our rights. No other Canadian citizens or residents must report such invasive information to CRA, so it would put us in a double jeopardy situation. No other Canadian citizens or residents must identify themselves by place of birth.
Let the lawsuits and/or Charter challenge begin!
Would you be so enthusiastic about an IGA if China were making such outrageous demands? Eritrea?
Banks and other financial institutions are not legally permitted to ask Canadian citizens and residents where they were born.
I have asked the following question of you numerous times here and in private communications with you. How will you determine who was born in United States?
These following are simple questions with simple yes or no answers. Will banks ask all customers where they were born? Will they ask all customers if they were born in United States? Will banks demand demanding copies of foreign birth certificates?
The second part of the question is equally simple. What is a bank’s legal authority for doing so?
I hope you will finally answer those basic questions.
Your response should be:
If you don’t Canada to become nothing more than an administrative region of the IRS you are going to have to resist the U.S. It will be much easier to resist now.
The question is a simple one:
Is Canada to be a sovereign “democracy of the people, by the people and for the people” or is it be ruled directly by the IRS?
The Canadian banks should take a position based on principle and the long term interests of Canada. The Canadian banks should not and cannot take the position that is in the interests of the banks.
This seems like a good moment to repeat a recent comment from Bubblebustin:
Are the Canadian banks going to assist the IRS in confiscating the retirement assets of Canadians?