It was Mark Twain who first mentioned the Responsible Officer (RO) liability issue to me a few weeks ago. It is one of the more obscure questions about the FATCA compliance that I hadn’t fully considered or focused any attention on. From my reading, this problem is becoming more and more apparent.
The Responsible Officers’ will carry the brunt of the FATCA compliance burden and risk
As far as I know, this FATCA fact has not been brought to the Canadian Bankers Association (CBA) attention in a way that might give them pause about their rush to compliance capitulation.
Brocker communication with the CBA has centered, rightly so, on how FATCA violates Charter rights, with or without an IGA.
In response, the CBA have feigned shared privacy and Charter concerns, while their back room lobbying and public statements show that they probably are more worried about getting that exemption from 30% withholding which the IGA promises, then they are concerned about any rights that might be violated. It trumps everything for them! They will eagerly take the 30 pieces of silver to hand ‘U.S. Persons’ over, if the Canadian government gives them an easy path, without thinking too much about their future liability risks!
Should we re-direct their attention to this issue?
Maybe we should point to the fact that some poor sod amongst their executive ranks, the Responsible Officer, is going to be personally liable for their FATCA compliance. Could this be an important arrow in our opposition quiver, so far not used? Time to strike a little fear in the hearts of those who just want to comply, comply, comply…?
“Hey! Listen up all you CBA Responsible Officers! You are personally on the FATCA hook! Are you paid enough for the liability you have signed up for?”
I am now seeing some questioning and discussion amongst the FATCA Compliance Complex (FCC) types on several linkedin FATCA threads. The questions indicates to me that the light is just turning on, with “Oh S#@%!, we aren’t personally responsible are we?”
There have been a couple other posts recently, when combined with the newest Treasury 50 page Fatwa II “Next Steps”, we could be using to spread a little fear in the hearts of the financial institution (FI) executives who are just meekly entering the FATCA Portal of Mordor, or lobbying for their IGA bailout.
They will NOT be bailed out from personal liability!
Just as the NSA uses 9/11 and terrorist fears to justify whatever-the-hell spying they want to do, let’s use this issue to our advantage.
Here is the blog that I have mentioned previously on the FATCA Question thread that deals with it fairly clearly.
You wouldn’t know it from the Myth title, but in the blog UK author Haydon Perryman makes this important point:
To top it all off, when you look at form 8957 you can see that the RO is signing up to personal liability under penalties of perjury; the form makes no reference to exceptions for IGAs.
This can lead to the RO wondering what the heck she or he is signing up to.
This leaves many banks pursuing the most draconian interpretation of the combination of the US [544 pages of Regs] and IGA versions of FATCA.
This is hardly a helpful simplification. It is however, a totally understandable position for Financial Institutions to take as part of their FATCA policy.
additionally he goes on to say… (speaking of cross jurisdictional FFIs)
The deadline for portal registration of April 25, 2014 (in order to be on the IRS list of June 2, 2014) has a few prerequisites, not least of which is that the RO is identified and named.
What RO would be content to accept that they are not personally liable for the institution’s FATCA Programme in IGA countries when, at the same time, the IRS portal makes no such distinction?
Also, of what practical use is not being personally liable in IGA countries, when the same individual is personally liable in [non] IGA countries? This is not much of a consolation, especially when you consider that the non-IGA jurisdictions have far more pressing regulatory deadlines that are already extremely tough to meet.
and then there is this from the guys that love FATCA… The Association of Certified Financial Crime Specialist
If financial crime compliance professionals think that becoming the FATCA Responsible Officer (RO) at their non-US financial institution is an easy way to a career boost, they should read the latest “Notice” from the US Treasury Department-Internal Revenue Service. They will see there is nothing easy about the job they aspire to. The Notice also included a draft agreement the foreign financial institutions (FFIs) would be required to sign.
So, it seems to me, that along with connecting our FATCA privacy concerns with the NSA spying scandal, (FATCA is just another back door access for them) I think we should also target the personal liability angle of those compliance mongering banking executives that pressure the Canadian government to sign an IGA.
I am not above spreading this fear message as necessary. I have been schooled by the masters, the IRS.