A reader of Isaac Brock sent me the following letter:
Dear CBA:
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.
Sincerely,
[Name withheld by request]
@Atticus, re; “They’ll be fine with it if our laws are changed to cover them hence the statements about “following the law” Which? The “new” law or the Charter of Rights? ”
They are supporting a work around re Treasury FATCA Myth#4:
“Myth No. 4: Some claim that countries are opposed to FATCA, in part because the legislation could force foreign banks to violate laws in their own countries.
FACT: Treasury’s decision to implement FATCA through IGAs that are respectful of the individual laws and customs of partner jurisdictions has contributed to the significant international interest in participating in FATCA compliance efforts. ”
The US Treasury has already helpfully suggested that in order to implement an IGA, signatory countries CAN change their own laws in order to implement FATCA so that then it will be ‘lawful’. And not just any laws, but fundamental ones, as in Charter of Rights, and constitutions, and laws re privacy and data protection. So, when banks support Canada entering into an IGA, they are supporting the unlimited change to Canadian laws that govern our rights and freedoms in order to accommodate the US, and to facilitate the conduct of their business interests. Which apparently, trump any considerations re the rights of Canadian citizens, taxpayers , as well as legitimating discrimination, loss of privacy, data protection, etc.
And there is significant doubt whether Canada could ever protect or account for that data anyway once it crosses into the US, because Canadian privacy laws are already not keeping up to date with the types of threat that the US poses to our privacy rights and data (ex. http://www.priv.gc.ca/search-recherche/index_e.asp?cn-search-submit=Search&rc=1&lg=eng&ss=visa+patriot+act&pg=1&npp=10). See the types of issues raised here – which are NOT resolved by Canadian privacy laws vis a vis the US Patriot Act http://www.dww.com/dww/wp-content/uploads/2007/06/cross-border_outsourcing_of_personal_information.pdf. http://www.dww.com/dww/wp-content/uploads/2007/06/cross-border_data_transfers.pdf. ) because of the Patriot Act, Homeland Security provisions, NSA, and all the other secret laws or policies that Canada has NO control over, wherein the US basically does whatever it wants to with data.
It is disingenuous for Canada – whether banks or the government to say that there is ANY control or accountability for that whatsoever, once our data is wholesale transferred to the US. And any protections that do exist in general are being further and continuously eroded (ex. http://www.michaelgeist.ca/content/view/6937/135/) .We know that Levin wrote that FATCA data should NOT be restricted for wider dissemination and access in the ways that 1040 return information is supposed to be. He means for it to be widely available and accessible in the US ( http://bsmlegal.com/PDFs/CarlLevin.pdf. ). And we know that the US can make any laws it wants to that could change even the nebulous terms of FATCA as it stands (last/later in time rule ex. http://opiniojuris.org/2008/05/08/how-do-you-interpret-the-last-in-time-rule/ ) – and that the US will NOT even notify treaty ‘partners’ of the unilateral changes (see the unilateral imposition of the Obamacare funding tax that our Canada/US tax treaty doesn’t cover, and the efforts of IRSCompliantForever to get an answer from Finance about why no notice was given to Canada http://isaacbrocksociety.ca/fatca/comment-page-47/#comment-579312 ).
Which is why any letters from any financial institution, or non-US government stating that they ‘respect’ the US ‘right’ to make its own tax and other laws are infuriating in this context of an EXTRATERRITORIAL MADE-IN-THE-US law designed for application externally and globally. The US tax laws basically assert that they OWN us from birth to death and all the fruits of our own labour and assets no matter where generated or held, and no matter where we live or have other citizenship, and no matter that we have NO other connection to the US other than a parent or birthplace, or long expired and useless greencard. For any other government or a bank to say that they ‘respect’ that is an insult and a crime. And, we know that the US recognizes no limits on its access to and dissemination of data regarding those it calls citizens, as well as those it does not http://www.theglobeandmail.com/technology/beware-of-data-spying-former-nsa-official-warns-canadians/article14430225/ .
Canada should follow the lead of the EU http://www.theguardian.com/world/2013/oct/17/eu-rules-data-us-edward-snowden and it will be interesting to see how these very new data protection initiatives will fare in conflict with any IGAs signed by EU members.
This extraterritorial and privacy conflict aspect of FATCA has been noted – see these instances where FATCA has been discussed by the Parliamentary Finance Committee in Canada http://openparliament.ca/search/?q=fatca See specifically this:
on February 14th, 2013 / 10:35 a.m.
Director, Banking Operations, Canadian Bankers Association
Darren Hannah
“We’re supportive of the intergovernmental agreement approach as an alternative to FATCA writ large—the negotiated approach, if you want to call it that, the U.S. regulatory approach—because it creates all kinds of challenges.
Under FATCA, absent the intergovernmental agreement, financial institutions would have to, in effect, agree to provide information across borders on, potentially, Canadian account holders to the IRS, potentially withhold on those who choose not to provide sufficient information to the financial institution, and in some cases close accounts of people. We don’t want to have to do that.
The alternative approach is through the intergovernmental agreement, where information is provided to CRA. We think that’s a better approach.”
Continue reading here http://openparliament.ca/committees/finance/41-1/105/darren-hannah-9/ to see more of what the CBA said – and which MPs were present.
I don’t expect much of banksters even in the ordinary run of things (am much happier with my credit union). ‘Corporate responsibility’ is an oxymoron. They seek to remake the law to benefit themselves, no matter what it would do to > 1 million Canadian families and accountholders. I laugh at bank websites that speak of their contributions and responsibility to their ‘community’ in light of what they are willing to do under FATCA.
Some Canadian financial institutions, Canadian banks and their associated investment arms have current significant and growing US-sited branches and interests which they will not want to jeopardize – quite apart from the access to US financial market issue: http://www.ottawacitizen.com/business/fp/said+before+multi+billion+dollar+Citizens+Bank+deal+rule+CIBC/9037949/story.html
It is very interesting to look at the past in terms of instances where Canadian banks were embroiled in issues re privacy, and of account holder citizenships – see for example ‘Settlements and ‘Controversies’ http://en.wikipedia.org/wiki/Canadian_Imperial_Bank_of_Commerce and there have been other instances where duals were denied or restricted from banking services based on specific citizenships held, and in reference to US laws http://www.cbc.ca/news/canada/u-s-rule-limits-accounts-for-some-canadians-royal-bank-1.681615?ref=rss . I would not be surprised to see some wording re FATCA similar to this: http://web.archive.org/web/20070120130224/http://www.rbc.com/newsroom/20070117us.html http://www.answers.com/topic/royal-bank-of-canada . The Privacy Commissioner did NOT protect Canadian Visa account holders from the potential of their data being subject to exposure to provisions of the Patriot Act while being sent over the US border to be processed.
Good comment Badger… and a lot of useful links. Appreciate the effort that went into it.
I totally agree with you, Just Me. Badger’s fully annotated efforts are always appreciated. This one is in my “Best of Badger” file.
@Em, @Just Me,
Thanks.
Can’t let the CBA generated ‘resistance is futile’ pap stand. No doubt they have their PR and ad campaigns all ready for their anticipated roll out of FATCA in Canada. I am certain that they would pay for full page ads to implement it, but not to alert Canadians in order to stop it – unless they’ve persuaded Finance to fund some ‘helpful’ Government of Canada info-ads instead – in order to deflect the heat from account holders.
Bank Transfer Day can be any day!
http://en.wikipedia.org/wiki/Bank_Transfer_Day
Blaze did it again … hope this gets published too. Meanwhile she sent it off to Flaherty, Shoom and Campbell.
http://maplesandbox.ca/2013/you-could-do-better-sirs/
Am wondering if only US place of birth was mentioned as the discriminatory grounds of a FATCA IGA because it is far more difficult for the CBA or the US to insist on account holders proving the citizenship of their parents?
The transmission of a lifelong US taxable burden to a child born a Canadian citizen dual in Canada via a US parent seems so absurd that I’d like the Harper government, Department of Finance and CBA to address how they can support that as a basis for discrimination under an IGA.
@Badger
You make a very interesting point. It seems to me unlikely that as a matter of international law that the U.S. can impose citizenship on a person born outside the U.S. But, why should the U.S. be able to impose citizenship on anybody at all?
If we all “sit tight” the true legacy of FATCA will be the end of citizenship-based taxation.
@USCitizen
I worry about the other legacy…. In the rush to create Sons of FATCA, and OECD auto exchanges, the rest of the world will begin to copy America’s vision, of citizenship chattel, without regard to residency as the ultimate taxing vehicle. Thus begins end of dual citizenship around the world as we retreat to the exclusivity of tribal (State) identities as represented by the one and only passport you are allowed to have.
@badger
Fantastic comment. I would like to send to my MP, schoom, flagerty and may. I gave up on trudeau. Is this okay bBy you?
Also, is it too soon too think of getting ready for class action suit ginst the government and banks?
@USCitizenAbroad, re; “It seems to me unlikely that as a matter of international law that the U.S. can impose citizenship on a person born outside the U.S…..”
There have been the ongoing discussions here at IBS about that, and in the Flott website, in this vein http://www.accidentaluscitizen.com/accidental-american-us-citizenship-self-executing-or-not/
Will Canada and the CBA do the US bidding in that regard? To act as US agents of immigration and US citizenship in order to interpret and enforce US citizenship transmission via parentage on those born in Canada?
It may be that in the case of Canadian-born children of ONLY 1 US parent, and whose birth wasn’t registered with the US, and who have no other US indicia (ex US passport, or records of US residence) it is going to be far too hard to routinely force them to prove clearly and substantiate the birth citizenships of their parents AND that the parent in question lived in the US the *requisite period of time. Or, be forced to provide a marriage certificate in order to prove that their US status male parent was legally married to their mother and that they were born in wedlock (and all the other *conditions).
*see http://montreal.usconsulate.gov/service/qualifying-for-u.s.-citizenship .
How can the US prove or disprove an exact period of long ago residency of the US status parent in question anyway? Most travel to and from Canada and the US did not require a passport up until recently. If one parent was a US born citizen who lived in the US 50 years ago for a few years as a minor, can the US actually establish how long their residency was in most cases? Will they really force people to prove the absence of US residency by making them provide their entire Canadian school and other records to account for all the years in question? I’ve met several people who lived in outports and rural areas where they did not stay in school for very long and left to support their family or look after siblings. They probably had no paperwork to draw on. Some are now deceased. There will be little or no information about where they lived or for how long.
How do the CRA and the CBA propose to force someone born in Canada, with no US SSN, no US passport, and no other US connection or registration, to have to provide incontrovertible substantiation for the non-US or US status of their parents, plus their parent’s marriage certificate, and proof of birth in or out of wedlock, and substantiate the years of the parent’s residency or nonresidency in the US. A US status parent who was naturalized as a US citizen also will NOT have a US birthplace on their birth and death certificates. Neither will ex-greencard holders. Passports were not common and not required for travel between the US and Canada until recently. So, I think the clearest category that they have, with the most unequivocal documentation that the CRA and the CBA could decide to demand – and the one they would have to focus on – is that of those individuals whose birth certificates clearly show a US birthplace. And even then, there is the question of those who can get a CLN because they have a US birthplace, but naturalized during the time that their loss of US citizenship was automatic. I might be wrong, but the discussions here seem to agree that those that naturalized here in Canada up until a certain year (which I can’t remember) are probably not going to have problems with obtaining a CLN to prove that they ceased being US persons on the day they swore the Canadian citizenship oath – though they should not have to – because it is a matter of record that it was US law that took the US status from them.
In terms of robust proof, how willing will Canada be to force someone to cough up detailed information on parentage and il/legitimate birth? And if parents aren’t living, there may be nothing other than their birth and death certificates that might be available in Canada. How far would Canada and the banks go to certify the status of all those that the US deems to be ‘US taxable persons’? They might go that far in fear of the wrath of the US and withholdings, but it would be very onerous, and that information is mostly not in someone’s banking records already – unless incidentally there have been complications with a US estate, etc. Or perhaps the bank notes the receipt of Social Security benefits (which you do not have to be a US citizen to enjoy) – and decides to investigate further.
So just how far will all that professed Canadian government and CBA ‘respect’ for US rights to make its own tax laws (and citizenship laws) extend under a FATCA IGA if they are not the ones in charge of determining the lengths they’ll have to go to in order to apply all those convoluted US rules about citizenship, residence, wedlock, parentage, etc.and certify account holders accordingly and satisfy the US so as to avoid any account closures and withholdings?
Not only does it make Canada and the FFIs into tax and enforcement arms of the US, it makes them into US immigration and citizenship judges too. Do they err on the side of reporting people falsely to the US if in doubt, or not?
Do the CBA and the Canadian Department of Finance really understand the complexities of US transmission of US taxable status, greencards, residency, substantial presence, citizenship via 1 parent, 2 parents, birthplace, naturalization, male parentage, female parentage, in wedlock or not, as per http://montreal.usconsulate.gov/service/qualifying-for-u.s.-citizenship ? Do they understand the complexities of the history of the US automatically denying dual status up until the Supreme Court ruled on it? http://americansabroad.org/files/3013/3478/0295/18-04-2012_1318_971.pdf
I doubt it.
Sure @northernstar, it is okay by me. But I was mostly drawing on comments that have been made here over the threads at Brock, so I can’t really take credit.
@Badger
This is what I refer to as ‘proving a negative’. When it comes to FFI’s ferreting out USP’s, “the absence of evidence is not evidence of absence”. Your papers, please! As far as I know DOS can provide a letter stating citizenship was not granted in a certain individual’s case (at least it did in the ’70’s for my mother when the Canadian government wanted to know).
@bubblebustin, if any Canadian FATCA IGA is signed, it must account for all these permutations, and it will further the crime of FATCA if it forces us to prove the ‘evidence of absence’. And those subjected to that level of personal invasion by their bank and some arm of the Canadian government is certainly going to be put in the mood for joining some kind of class action lawsuit and seeking redress for being subjected to processes that no other Canadian citizens and residents are. I think that would also only strengthen the case for conflict with the Charter and Constitution. Canadian banks do not currently require that bank account holders show proof that they were born in wedlock, the birth and death and citizenship records of their parents, etc. This is going so far that the discrimination and privacy invasion is absurd.
The CBA skipped over that by saying that they don’t know what the terms of a FATCA IGA would require them to do. Well, they should be studying up on the convoluted history and complexities of US nationality and citizenship law then.
American Citizens Abroad head to Washington to discuss residence based taxation as part of comprehensive tax reform:
October 28 – 31, 2013 ACA will be holding a series of meetings with key representatives from JCT, Senate Finance, House Ways & Means, Treasury as well as key legislators to keep the pressure on adopting our Residence Based Taxation (RBT) proposal and other important issues such as easing FATCA regulations for overseas filers and easing compliance for past latent filers with ACA’s Comprehensive Compliance Proposal (CCP).
@Badger…. RE “Do the CBA and the Canadian Department of Finance really understand the complexities of US transmission of US taxable status, greencards, residency, substantial presence, citizenship via 1 parent, 2 parents, birthplace, naturalization, male parentage, female parentage, in wedlock or not,”
To answer your rhetorical question…..Of course NOT. How could they? Hell, very few people have considered it, or thought about the consequences prior to Obama’s offshore jihad.
BTW, has anyone heard anything from the Stepford Wives, DemsAbroad?
Yes, Badger, it’s hard to believe the CBA is less clued in than we are with the resources they have. Makes you realize that one of the biggest factors here is empathy, which the CBA is surely lacking.
@JustMe
I discontinued my emails from Dems Abroad a long time ago. I realized they are the expats who WANT to stay American. They did inform me of FATCA and their meeting I had to pay for had the tax consultants ready to sign me up to pay thousands to comply. Google helped me find Brock and Maple Sandbox. It was a blessing for me.
@northernstar
Any apologist for the USG living outside the US (which Dem”s Abroad is) is no friend of mine. They are what we might refer to as ‘homelanders abroad’ and do more harm than good.
@badger
“The US Treasury has already helpfully suggested that in order to implement an IGA, signatory countries CAN change their own laws in order to implement FATCA so that then it will be ‘lawful’.”
When I first heard of FATCA, which seemed like eons ago, I read this response by Treasury in what I call the “Deloitte files”. The arrogance and dismissiveness of this specific comment helped shape how I feel about the USG today. For sovereign nations, it should be intolerable and considered an act of war. Imagine how the US would react to a similar demand from another country?
@bubblebustin,
thanks for that ACA update.
@Just Me,
The CBA and the investment affiliates have urged the Harper government to sign an IGA. If they do not understand or haven’t bothered to research the complexities of the ‘US taxable person’ categories that they are so eager to identify and certify under FATCA, and the pitfalls thereof, then they are negligent as well as being unethical. And what do they propose to do about the ‘snowbirds’? Re-certify them over and over again?
The US doesn’t care – it is all about “shoot them first and sort them out later” – too bad so sad if many ordinary law-abiding NON-us accountholders have to spend years and thousands trying to sort out being misclassified, or get back erroneous withholdings and have their accounts frozen or closed. Or if the data is stolen by hackers or compromised. They’re counting on not having to deal with anyone with any resources or tenacity from abroad – or they’ll just let the IGA country governments take the flack – IF it is then deliberately construed as Canadian law. And as for the banks, it’s the same – they have all the lawyers and can stall ordinary account holders while they merrily go on expanding into the US. Have you ever tried to sort out anything with a bank? I’m reminded of this egregious incident http://www.theglobeandmail.com/report-on-business/cibc-faxes-go-to-scrapyard/article1144689/ (and the fact that in the end, the bank got no penalty of any kind from the Privacy Commissioner http://www.canton.elegal.ca/articles/CIBCJunkyardFaxes.PDF http://www.priv.gc.ca/cf-dc/incidents/2005/050418_01_e.asp ). And I believe that in addition, the bank in question either threatened or lodged a suit against the unwilling receiver of the errant faxes, who had been trying to return and stop them over a period of years http://blogs.canoe.ca/davidakin/main-page/federal-bank-regulator-probes-cibc-fax-fiasco/ .
How then should we feel about the protection of our account and personal information under a FATCA IGA? http://www.ifcreview.com/restricted.aspx?articleId=6827 The involvement of the CRA and federal government does not guarantee our security http://www.huffingtonpost.ca/2013/04/23/canada-privacy-breach-charlie-angus_n_3142560.html Nor does the history of the security of taxpayer data in the US by the IRS http://www.informationweek.com/government/security/irs-leaves-taxpayer-data-insecure-gao-fi/240151190http://www.pcworld.com/article/2015543/irs-blamed-in-massive-south-carolina-data-breach.html which was formally noted by the US Government Accountability Office (GAO) http://www.accountingweb.com/article/gao-takes-irs-task-information-security-control-lapses/221379 And the Privacy Commissioner appears to have no teeth.
This is a very interesting document that seems to contain specifics of what the CBA, IIAC and associates urged or are urging the Canadian Department of Finance to consider in a FATCA IGA:
http://www.clhia.ca/domino/html/clhia/CLHIA_LP4W_LND_Webstation.nsf/page/06A7E6DA85F3446885257B34006CD347/$file/Joint_Comments_FATCA_IGA.pdf
Joint FI Industry Comments to Finance re FATCA IGA February 11, 2013
“The following comments include concerns identified by Canadian FI associations (CLHIA, CBA, IFIC and IIAC) with respect to the implementation of FATCA under a Canadian IGA.”……….
There is a large section on the problems with Canadian registered accounts – none of which appear to be successfully excluded from a FATCA IGA – including RRSPs
…”Exempt Products
While the final FATCA regulations provide additional flexibility to address registered products, it appears that all major Canadian government sponsored registered savings products would still not qualify for the exemption provided by the regulations. We strongly believe that RRSPs, RRIFs, TFSAs, RESPs and RDSPs in principle should qualify for an exemption and are low risk accounts for tax evasion purposes. We ask that they all be specifically included in Annex II of a Canadian IGA. …” pgs 9-11
“Snowbirds
Both the FATCA regulations and the IGA require that where a “change of circumstances” occurs, FIs are required to cure any new indicia that becomes present. “Snowbirds” are a particular challenge in this instance because they serially relocate to the U.S. on a temporary basis…….. ” pg 7-8
About those ‘recalcitrant’ persons:
…”An example where the IGA reporting is more onerous than reporting under the Regulations is in the case of accounts that would be classified as recalcitrant under the Regulations. The Regulations require that the FI report, for each of a number of categories of recalcitrant, the total number of accounts so classified and the total value of those accounts. Under the IGA, however, where self-certification cannot be obtained, the account may be treated as a US account, with full reporting, even though the status of the account holder as a US person is uncertain. One such case of treatment as a US reportable account is found in the “change in circumstances” clause for New Individual Accounts (Annex I, Section III. D).
Recommendation:
Therefore, we believe that domestic guidance should always allow FIs to follow the regulations as an alternative to the IGA and associated guidance where the regulations are less burdensome, and our understanding is that this is the approach being taken by
other jurisdictions, including the UK. “…… pg 2
I see no concern about joint account holders who are NOT US persons. Nothing about privacy or data protection concerns. Nothing about recourse for errors in certification or erroneous certifications and withholding.
@Badger.,..
See my comment here…
http://isaacbrocksociety.ca/fatca/comment-page-49/#comment-592902
What happens if a Canadian bank makes a mistake under FATCA and misclassifies or erroneously withholds on an accountholder?
Who might provide recourse if there was an erroneous FATCA mistake? Just substitute the IRS for the CRA?;
http://www.cbc.ca/news/canada/nova-scotia/35k-tax-bill-for-widowed-dad-from-scotiabank-s-mistakes-1.2126135
…….“We regret we are not in a position to provide compensation with respect to any penalties you have incurred from Canada Revenue Agency,” read an email from Scotia iTrade on Oct. 3…….
Today’s Tages-Anzeiger carries an interview with a Danish historian who describes how Denmark, while occupied by the Nazis, managed to move 6,000 Danish-Jews to safety in Sweden. This was the only Nazi occupied country that acted in this way. The reason for this was that Danes considered Danish-Jews to be part of them and there was a spontaneous effort to assist their fellow Danes.
The Canadian Bankers Association clearly does not consider Canadians with American heritage to be fully Canadian and is ready to assist handing them over to a foreign power. The CBA should be ashamed of itself for its willingness to sell out Canadian citizens.
Here’s the translated interview with the Danish historian, Bo Lidegaard:
http://translate.google.com/translate?sl=auto&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fwww.tagesanzeiger.ch%2Fkultur%2Fbuecher%2FDas-Ereignis-ist-ohne-Vergleich%2Fstory%2F25411855
Ways and Means just now posted on twitter that they are working on tax reform. So what other “new” laws are they going to be allowed to shove over the border after Canada accepts FATCA?? Once you take that one step it will be easy for them to just continue making our laws for us.
Bubblebustin –
You can protest anything anywhere. Experience helps. Theory sorta useless.