The Isaac Brock Society and Maple Sandbox today issued a joint letter to Mr. Terry Campbell, President of the Canadian Banker’s Association, detailing their opposition to FATCA. The letter, which was hand delivered to Mr. Campbell’s office, is reproduced below. As well, you can download the PDF of the letter here.
November 12, 2013
Terry Campbell,
President,
Canadian Bankers Association
…
Dear Mr. Campbell,
As citizens and residents of Canada, we are strongly opposed to the Canadian Bankers Association’s (CBA) recently-stated advocacy for an intergovernmental agreement (IGA) that would allow the government of the United States – through the Foreign Account Tax Compliance Act – to impose its tax laws in Canada.
Such an agreement would represent a gross violation of Canadian sovereignty and would violate the rights of Canadian citizens and residents under the Charter of Rights and Freedoms, the Canadian Human Rights Act, the Personal Information Protection and Electronic Documents Act, and other legal guarantees. The CBA’s claim that an IGA would mitigate these violations in any meaningful way is illusory.
There are an estimated one million people in Canada who have, one way or another, connections to the U.S. that would place them, through FATCA, on the U.S. Internal Revenue Service’s radar screen. Add in family members, who are also caught up in this net, and the one million gets closer to four million – that’s nearly 12% of the Canadian population!
We implore the CBA to use its considerable influence and resources to insist that the Canadian Government categorically reject Washington’s demands and to lobby for FATCA’s repeal by the American Congress. We are writing now because within the past few weeks, CBA officials have confirmed that despite your valid and well-known concerns about FATCA, they now believe that Canadian banks have no choice but to comply, and that an IGA is the best way to facilitate compliance.
This has been spelled out publicly in two items posted on the website of the Isaac Brock Society (IBS) on October 18 and 19, 2013. We note especially the following excerpts (the full texts of the CBA postings appear at the end of this letter for your reference):
From the October 18 posting on IBS:
“The CBA and banks in Canada have been standing up for bank customers and voicing concerns with FATCA for a number of years. . . . 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.
“We submitted an opinion piece with our concerns about FATCA to the Washington Post and the Wall Street Journal. It did not get published.
“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.”
From the October 19 posting on IBS:
“We agree with your opposition to FATCA as we have said all along. We have raised those concerns on numerous occasions with the U.S. Treasury, the IRS and other U.S. officials in both public and private meetings.
“The U.S. government is not going to repeal FATCA and the Canadian government is negotiating an IGA with the U.S.
“We have made our concerns about FATCA known to the Canadian government, but it is now up to them to negotiate an IGA that will hopefully address your concerns and ours and balance out Canadian law and rights with the requirements of FATCA. We have no control over the negotiations or the content of the IGA and neither do the banks or other financial institutions.
“[T]he financial services industry has not capitulated and we are not enthusiastic about an IGA. Our concerns about FATCA have not changed but the reality is that an IGA is coming.”
In view of those statements, we believe the following three points summarize the CBA’s position on an IGA:
- FATCA repeal is impossible: The CBA claims that it as well as others in the financial services industry have exhausted all options to get rid of FATCA. Therefore, compliance with FATCA is unavoidable.
- An IGA is inevitable: Because of FATCA’s inevitability, an IGA to impose FATCA on Canada is considered by the CBA to be the “least bad” option. The IGA is being negotiated between the Canadian Government and the U.S. Treasury Department, and also can be considered inevitable.
- An IGA is acceptable to Canadians: The CBA considers an IGA to be the best option to protect Canadian citizens and residents (“balance out Canadian law and rights with the requirements of FATCA”).
There is no foundation to any of these positions, as we outline below:
1. FATCA repeal is impossible:
It is not!
The United States does not have a parliamentary system of government. “U.S. officials” at IRS and the Treasury Department (i.e., the Executive Branch) are mandated to implement and enforce legislation passed by Congress. They can’t repeal it. Nonetheless, as the CBA stated:
“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.”
Beseeching the ‘enforcers’ of legislation is not the way you get changes from the ‘creators’ of the legislation. Meetings with these officials are not just useless, they may be counter-productive. We understand representatives of the CBA have made limited efforts to convince some U.S. Senators and Congressmen of Canadian banks’ concerns. U.S. legislators, unfortunately, care about their own constituents, not foreign banks’ headaches (even if they are caused by a U.S. law).
A rejected Op-Ed is not an example of CBA due diligence. Submitting an op-ed piece to major U.S. publications is laudable, but rejection should not have stopped the effort. The CBA has the resources to run a full page ad and/or resubmit to Canadian Media sources. Why wasn’t that done?
Despite CBA’s claims, there has been no worldwide effort against FATCA. Instead of pretending to have tried to secure FATCA’s repeal and failed, the CBA and its member banks should now direct funds to supporting a strategic and professional Washington-based effort.
FATCA’s glaring weaknesses can be easily exposed through standard lobbying and public relations techniques. Perhaps begin with the questionable authority of the IGAs under U.S. law. (Even though they are signed by the State Department, they are not Treaties and will not be presented to the Senate for ‘advice and consent’.) Treasury delays and timeline failures for reaching a critical mass of IGAs signed add another weak point. IGAs are essential for FATCA to be a success from a U.S perspective. This provides opportunity for real pushback.
Then there is reciprocity – FATCA’s Achilles heel. It is the carrot they promise, but cannot deliver, given the political realities and opposition in Congress. Treasury will never be allowed to impose a domestic FATCA (DATCA) on all U.S. financial institutions (USFIs) to meet the reciprocity promises. You could exploit that very effectively, but you have done little.
The CBA and its members have the resources to do far more. Rick Waugh, Chief Executive Officer of the Bank of Nova Scotia, recently revealed that his institution has spent nearly $100 million for FATCA compliance. (“Electronic spying ‘a big issue’ for banks, Scotia CEO Waugh says,” Financial Post, October 23, 2013).
Leaving aside the insoluble data vulnerability and information security problems banks are encountering (compounded by the ongoing scandal of U.S. electronic spying which creates enormous loss of trust in U.S. assurances), FATCA creates massive costs that will be passed on by your member banks to ALL Canadian consumers.
CBA’s members are pouring money into preparation for FATCA compliance, implementing procedures that are illegal under current Canadian law. You are pouring all your money into compliance solutions, sold to you by the FATCA Compliance Complex, (FCC) and nothing, as a hedge, on a serious lobby effort to undo this monster! We don’t get it! Without some serious expenditure on the other side of the bet, you are placing all your eggs in one basket thus risking everything on one outcome.
To clearly illustrate the risk you take by capitulating, consider the tremendous liability you will visit on your own employees should FATCA implementation go through via an IGA. Each financial institution is required to designate a Responsible Officer whose job is to ensure full compliance with FATCA. Under U.S. law (read the fine print in the FATCA regulations) those Responsible Officers could be subject to imprisonment of up to 3 years, or fined up to $250,000 (and your institution also fined up to $500,000), or both, together with cost of prosecution (not to mention having to pay the cost of legal defence). How likely are any of your employees to apply for the RO job, once they are aware of this aspect of the job description? How will your banking customers view this vulnerability?
2. An IGA is inevitable:
It is not!
The U.S. Treasury Department admits that it cannot compel FATCA enforcement on an extraterritorial basis without IGAs. As stated in the Fiscal Year 2014 Budget request sent up to Capitol Hill in April (Analytical Perspectives to the Fiscal Year 2014 Budget, page 202):
“In many cases, foreign law would prevent foreign financial institutions from complying with the FATCA provisions of the Hiring Incentives to Restore Employment Act of 2010 by reporting to the IRS information about U.S. accounts. Such legal impediments can be addressed through intergovernmental agreements under which the foreign government agrees to provide the information required by FATCA to the IRS.”
Among other statutes, this refers to the Charter and other protections in Canadian law. Without an IGA and modification of Canadian laws and Charter, Canadian banks cannot legally comply with FATCA, which would leave the U.S. Treasury Department with the choice of declaring economic war on America’s biggest trading partner (the 30% withholding threat about which the CBA rightly complains) or backing down.
By advocating an IGA, the CBA relieves Treasury of this dilemma – and saves an otherwise doomed FATCA. The IGA’s supposed “inevitability” becomes a self-fulfilling prophecy. Indeed, it is worse than that. The CBA would have us believe that the IGA is in the pipeline all by itself, that the CBA is just a passive bystander:
“We have no control over the negotiations or the content of the IGA and neither do the banks or other financial institutions. The financial services industry has not capitulated. and we are not enthusiastic about an IGA. Our concerns about FATCA have not changed but the reality is that an IGA is coming.”
There would be no prospect of an IGA at all without the efforts of the CBA and other elements of the Canadian financial industry, notably the Investment Industry Association of Canada (IIAC). (To its credit, Credit Union Central of Canada is opposed to an IGA, though they are aware an IGA may be forced upon them through the efforts of the CBA, the “Big Five” banks, IIAC, and others.)
In short, it is unbecoming and disingenuous for the CBA to make the assertion that “the reality is that an IGA is coming” as though it were the result of some natural phenomenon, and unrelated to the CBA’s own energetic efforts.
If there is an IGA imposed on Canadians, it will be in large part because your organization and your member banks pushed a reluctant Government to give you one. Let’s not sugar coat it. An IGA is a FATCA bailout for you and your member banks, pure and simple. You may have “no control over the negotiations” but you certainly have influence, which you are using to your customers’ detriment.
3. An IGA is acceptable to Canadians:
It is not!
The CBA is accurate in asserting that it has “no control over the content of the IGA and neither do the banks or other financial institutions.” Neither does the Canadian Government. It is well known that the standard IGA text (model 1), including the Treasury Department’s vague promises of reciprocity, is essentially set in stone, with only marginal changes permitted, notably with listing of FATCA-exempt entities on Annex II. This is not a negotiation with “give and take” allowing input from Canada.
In our view an IGA is a one way cram down, plain and simple, dressed up under the façade of politically acceptable language of “bilateralism” or “negotiations”, and then sold by you as inevitable and acceptable to Canadians. It is neither.
A December 2012, five page letter from noted constitutional scholar Peter Hogg, former Dean of Osgoode Hall Law School, provided detailed analysis of FATCA’s violations of Canadians’ rights (as described and excerpted below):
“FATCA compliance costs for the world’s financial institutions are astronomical, and Canada’s banks are hoping that the federal government will negotiate an intergovernmental agreement (IGA) with the Americans that would allow them to report data on U.S. citizens [Note: actually U.S. Persons] to Canada Revenue Agency, which in turn would send it to the IRS. The U.S., to facilitate this approach, has written a Model Agreement to be used as a template for these so called ‘bilateral tax’ agreements.
“But a major obstacle to all this is Canada’s Charter of Rights and Freedoms, which prohibits (Section 15.1) discrimination based on several criteria, including ‘national or ethnic origin.’
“In my opinion, the procedures mandated by the Model IGA are discriminatory in a way that would not withstand Charter scrutiny. These procedures effectively treat individuals differently, and adversely, based on an immutable personal characteristic, specifically citizenship. If Parliament were to enact legislation authorizing and permitting this type of differential and adverse treatment, the legislation would contravene the equality protections in section 15 of the Charter.”
Professor Hogg’s letter goes on to point out that Section 1 of the Charter allows governments to impose reasonable limits to Charter provisions, but then argues:
“… any argument attempting to use Sec. 1 to justify limitations on the equality rights would be extremely weak. The objective of ensuring compliance with U.S. tax laws is probably not important enough to justify breaches of the Canadian Charter, and even if it was … the measures contemplated (by the U.S.) are grossly disproportionate to the objective.”
FATCA could affect four million Canadians, or 12% of the population: There are about one million people in Canada, the vast majority Canadian citizens, who have connections to the U.S. in one way or another, and who are claimed by the U.S. Government as “U.S Persons” subject to or impacted by U.S. tax laws, reporting requirements and penalties for failure. By the time family members, also affected by FATCA, are factored in, that one million number could get as high as 4 million people.
The “U.S. Person” concept is a very broad and complicated designation subject to change without notice and without Canadian input. It de-facto declares that U.S. personhood is supreme over Canadian residents even if they are Canadian citizens! In simple terms, U.S. citizenship (or U.S. personhood) trumps Canadian citizenship in Canada! It is not an ‘international norm’. It is an imperial assertion! FATCA, resting on the unnatural foundation of U.S. dominion over U.S. persons, impacts this non-exclusive list:
- “Accidental” Americans — born in Canada to parents who are (or were) U.S. citizens;
- Americans who left the U.S. decades ago and thought they automatically relinquished their U.S. citizenship when they became Canadians;
- Americans who have migrated to Canada and obtained Canadian dual citizenship status and reside in Canada;
- Canadians who are permanent residents while still retaining U.S Citizenship status;
- Border babies – people born to Canadian parents in the U.S. who came home as infants;
- Babies born to Americans while residing in Canada;
- Spouses of said U.S. Persons having joint accounts;
- Business partners with American U.S. Persons residing in Canada;
- U.S. green card holders who have returned to Canada to live;
- Canadian citizens and residents who have a “substantial presence” in United States, i.e. Canadian snowbirds;
- Companies/associations who have employees with ‘U.S. personhood’ who have signing authority on company bank accounts.
Despite the American requirements for the reporting of financial records of these individuals, the term “U.S. person” has no legal meaning in Canada.
Many of the same FATCA concerns voiced by Hogg (as referenced above) have been raised by others.
First was MP Elizabeth May of the Green Party.
Now, more recently by Murray Rankin, the Official Revenue Critic of the New Democratic Party (NDP) in a September 2013 letter to Finance Minister Jim Flaherty.
Then, the Leader of the Opposition, Tom Mulcair (NDP), later upped the ante in a letter to voters, endorsing Rankin’s stand and even mentioning the dreaded “S”-word: “sovereignty”!
Even more pointedly, another Party joined the chorus. Liberal MP Ted Hsu addressed to the Government detailed questions about the FATCA IGA, to which the Government is obligated by law to answer in 45 days.
A few days later, Liberal MP Scott Brison also added a different set of FATCA questions to House of Commons Order and Notice papers which again will require a response.
These questions include disclosing “which specific individuals and groups did the Minister of Finance consult regarding any IGA, and on what dates.” We look forward to examining the details of the CBA’s and your member banks’ consultations with the Finance Ministry.
Everyone is a FATCA critic, but some become witting or unwitting co-enablers
Mr. Campbell, it is well known that Minister Flaherty is no less a critic of FATCA than you are. However, it simply does not pass the test of credibility for the CBA to claim that an IGA would “hopefully address your concerns and ours and balance out Canadian law and rights with the requirements of FATCA.”
To the contrary, if the CBA’s efforts to get an IGA signed are successful, it would mean that all of the violations of the rights of Canadian citizens and residents of which Professor Hogg, Ms. May, Mr. Mulcair, Mr. Rankin, Mr. Hsu and Mr. Brison warn would be institutionalized in Canadian law.
In fact, as made clear in the U.S. Fiscal Year 2014 Budget request, removing existing protections and legitimizing their violation is a specific and intended goal of finalizing an IGA. Your support for a FATCA IGA guarantees the success of the U.S. mission.
FATCA’s 30% withholding threat leaves no options?
We understand CBA’s concern over the imposition of a 30% withholding penalty on U.S.-source transactions for any institution that does not toe the FATCA line. Such blackmail is almost unprecedented in modern history. And we know that this withholding threat is, in your opinion, a trump card held by the U.S. to make sure everyone falls into line.
But has it occurred to you that all it takes is one courageous nation to stand up to this kind of bullying to destroy FATCA altogether? The CBA thinks it has no choice, but consider this defining moment in Canadian political history and perhaps you’ll reconsider:
Correction: “You had an option, Sir.”
Those are the words, which Brian Mulroney thundered at John Turner in 1984, and changed Canadian history. Going into the leadership debate, the Liberals had a comfortable lead. Instead, Mr. Mulroney’s Progressive Conservatives were elected with 211 seats, the largest in Canadian history:
MR. MULRONEY’S WORDS:
“You had an option, Sir. You could have said ‘I’m not going to do it. This is wrong for Canadians and I’m not going to ask them to pay the price.’
“You had an option, Sir. You had an option to say ‘No.’ You chose to say ‘Yes’.
“If I may say respectfully, that is not good enough for Canadians…That is an avowal of failure…”
“You had an option, Sir. You could have done better.”
Mr. Campbell, you too have an option.
The CBA repeatedly has said that it is opposed to FATCA but must comply. To do so, the CBA is advocating an IGA which would allow – indeed, mandate! – that Canadian banks violate rights of Canadians based on one basic factor: their place of birth.
If we may say so respectfully, Mr. Campbell, that is not good enough for Canadians!
You have the option to say “NO” to FATCA.
If you say ‘Yes” to an IGA, it is an avowal of failure.
“You have an option, sir. You could do better.”
Please don’t capitulate to U.S. demands!
There are small, weak countries in the world that, when confronted with threat of illegal reprisal by a powerful foreign state for not surrendering their sovereignty and abrogating their citizens’ rights, have no choice but to capitulate.
Canada is not one of them. True, Canada is not so powerful as the United States. But neither is she small or weak.
The CBA states: “[T]he financial services industry has not capitulated and we are not enthusiastic about an IGA.”
The U.S. Treasury Department does not demand Canada’s enthusiasm, just Canada’s obedience. An IGA is exactly the capitulation they demand.
Mr. Campbell, you have to do better:
Instead of urging the Government of Canada to accept an IGA that would impose U.S. law in Canada –
- Please ask the Government to tell the U.S. they cannot impose FATCA on Canadian citizens, residents and financial institutions;
- Please ask the Government to demand that the U.S. follow ‘international norms’ of residency based taxation, and not try to impose its unique citizenship taxation and penalties on the Citizens and residents of Canada;
- Please tell the Government that it should not change Canadian laws to accommodate the demands of a foreign government;
- Please tell the Government that Canadian banks are committed to enforcing only Canadian laws on banking, privacy, and human rights, and that the Government has a duty to protect you from any American reprisal, with counter-reprisals if necessary.
Instead of preparing to violate the legal rights of Canadian citizens and residents, the CBA and your member banks should insist that Canadian citizens and residents born in United States:
- Are not second class citizens and residents in their country of choice;
- Have the same rights to manage their finances with confidence and in privacy with their banks as all other Canadian customers;
- Should not fear closure of accounts for just being born in United States or simply because they will not consent to having their financial information divulged to a foreign government;
- Should not have to accept a two tier banking service, based on place of birth and without respect for the privacy of Canadian customers.
The CBA should belatedly begin a serious lobbying and media campaign to secure FATCA’s repeal.
If the Canadian Government and Canadian citizens spoke with one voice and told the U.S a firm “No” on an IGA, and a firm “No” on FATCA enforcement in Canada, it would resound around the world. Other countries would be encouraged to stand up to the U.S. on FATCA, and the path to the repeal of this misguided law would be opened. Anything less is capitulation and sovereignty surrender to American imperial will.
To accept FATCA with or without an IGA, is an abrogation of all Canadian citizen Charter rights, freedoms and privileges! We earnestly and respectfully urge you “to do better,” and thank you for your kind attention.
This letter is the collaborative effort of Canadians from coast to coast – most are active participants in both the Isaac Brock Society and Maple Sandbox blogs. Many are dual U.S. citizens, many are former U.S. citizens or former green card holders; but all have palpable fear about an impending betrayal of their financial privacy rights by their banks and by their government. They do not want their names revealed at this point because what they fear most is an unprincipled predatory financial attack by the U.S. helped by that Canadian betrayal.
For further information contact:
Lynne Swanson, maplesandbox at yahoo dot ca
Administrator, Maple Sandbox
Peter W. Dunn, petros at isaacbrocksociety dot ca
Administrator, Isaac Brock Society
APPENDICES
The Canadian Bankers Association says:
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:
http://www.cba.ca/en/research-and-advocacy/47-regulatory-enviornment/598-foreign-account-tax-compliance-act
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:
http://www.ibfed.org/news/ibfed-writes-to-g7-on-fatca-12-4-11
http://www.ibfed.org/archived-news/ibfeds-recommendation-to-us-authorities-on-the-foreign-account-compliance-t
http://www.ibfed.org/archived-news/us-foreign-account-compliance-tax-act-fatca
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:
http://cba.ca/contents/files/presentations/pre_20120515_irsfatca_en.pdf
http://www.youtube.com/watch?v=3kVM2vV8jPU (Preview)
http://www.youtube.com/watch?v=wosK05ynMX4&feature=plcp
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.
Sincerely,
The Canadian Bankers Association
+++++++++++++++++++++++++++
The Canadian Bankers Association says:
We would like to address some of the comments made in this forum. We agree with your opposition to FATCA as we have said all along. We have raised those concerns on numerous occasions with the U.S. Treasury, the IRS and other U.S. officials in both public and private meetings. We have raised those concerns with the Canadian government and the Canadian embassy in Washington in public and private meetings. We are opposed to the extraterritoriality of FATCA as you are and we have said so publicly on many occasions.
However, the reality is we are past the point of whether Canadian financial institutions can choose to comply with FATCA or not. The U.S. government is not going to repeal FATCA and the Canadian government is negotiating an IGA with the U.S. According to public statements made by Finance Minister Jim Flaherty, the final IGA is coming soon, and once finalized, its requirements will be reflected in Canadian tax law. Canadian financial institutions will then be required to comply with whatever those requirements end up being under Canadian law.
We have made our concerns about FATCA known to the Canadian government, but it is now up to them to negotiate an IGA that will hopefully address your concerns and ours and balance out Canadian law and rights with the requirements of FATCA. We have no control over the negotiations or the content of the IGA and neither do the banks or other financial institutions.
To address some of @LynneBlaze’s points raised here and on Twitter, the financial services industry has not capitulated and we are not enthusiastic about an IGA. Our concerns about FATCA have not changed but the reality is that an IGA is coming.
You have also asked if banks and other financial institutions will ask all customers where they were born and what would give them the legal authority to do so. The requirements are unclear right now but we are expecting the details to be outlined in the IGA.
to J.E. Gutierrez
You are making the same argument. Why should shareholders have to pay for the 100 million it costs that Cdn Banks have to pay with more cost to come over the next 30 years for a US law that should have nothing to do with Cdn companys in Canada. The banks should just say no to FATCA !!!!!!!! end of story.
As a shareholder, I would want the Cdn banks to say no to FACTA. Not implement something that is illegal (FATCA) and incur costs for the next 30 years or more. They shouldn’t have to go to Washington to prove anything either. Stay home and don’t implement anything for the IRS. I do not no why they went to Washington to fight FATCA. Don’t implement anything and make Washington come to Canada and prove that the illegal stuff they are trying to do to Canada is Costitutional in Canada. Let them come to Canada and tell Cdn Citizens that Canadians should change their laws to make US happy and see how that goes.
@J.E. Gutierrez
I personally welcome your participation in this debate. One problem with FATCA is that is has been under-debated and under-reported. To address your points:
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. Simply being a “private company” does not put banks above laws prohibiting discrimination against people based upon birth-place – any more that a private landlord would be allowed to treat tenants born in Pakistan differently from any other tenant.
Chartered banks in Canada are large publicly-traded, Federally regulated industries. 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.
So-called “US persons” are not a negligible minority. The number of people affected in Canada by FATCA could equal or exceed the number of Canadians who claim First Nations status.
Additionally there is a strong precedent in Canada that when foreign laws conflict with Canadian law, a Canadian bank must comply with Canadian law. Also, the effect of foreign law is a business risk that Canadian banks take on voluntarily. In Van deMark vs. Toronto Dominion Bank [1989], a Canadian high court decision established that:
– in a conflict of laws, Canadian law has primacy over the laws of foreign jurisdictions where the bank also does business; and
– Canadian banks may not act as foreign revenue collectors or enforcers.
The threat of FATCA-based withholding against payee institutions is a unilateral trade sanction. Have banks considered possible sanctions in response – other than embargoing any so-called “US persons”? The world’s financial industry is a significant force, and the US government is a debtor state that needs the world’s trust, credit and continued investment.
Regarding Jim Jatras making money as a lobbyist: what’s wrong with engaging on a “seasoned lobbyist”? Would an amateur lobbyist be somehow better? The CBA is a professional lobbying organization. Many organizations – from corporations to trade unions to medical associations to single issue groups – hire lobbyists to assist them in communicating with and influencing politicians. I have no objection to anyone paying Jim Jatras to argue this cause, anymore than I would object to paying a lawyer to represent my interests. The laborer is worthy of their hire.
Finally, the authors of the letter have also made this case to both government and the press. But access to banking services is at the heart of the issue, and the CBA represent Canada’s banks and CBA have also have represented FATCA as being somehow beyond their control or influence. In reality, they appear to have been influencing the government to abandon its principles of sovereignty and moral leadership to expedite a one-sided and constitutionally unlawful deal that releases them from FATCA’s blatant conflicts with Canadian law.
Thank you for your interest in this issue and I encourage you to discuss it widely and publicly.
@FATCA Dump
You are right that in an ideal world the shareholders should not have to pay for anything, neither for the costs of complying with FATCA nor for the expenses of lobbying against its repeal. But in reality, they cannot escape having to pay for something, as inaction, or simple rejection of the law as you suggest, is not an option. What the authors of the letter seem to fail to grasp is that the interests of the shareholders (and the depositors at large, not to mention the taxpayers) are best served by finding a way to reduce the cost of compliance, rather than becoming involved in an insurrection campaign that has a very low probability of success, and that carries enormous business risks.
@schubert1975
Thank you for your reply to my post and for not unleashing the dogs on me. I did not know that the Canadian Charter applied also applied to private transactions, so I appreciate you taking the time to point this out.
@Wondering
Thank you for answering my post.
There is indeed nothing wrong about hiring a lobbyist (up to a point…). However, I find it surprising that the authors rely extensively on Mr. Jatras input without ever appearing to question his ultimate motives. Mr. Jatras has expressed a number of opinions here and on his won website that can be easily challenged, but which have been take on in the letter without any critical analysis.
Your explanation of the legal conundrum facing Canadian banks is extremely useful. It truly seems that there are no easy options. Clearly, the banks will have to comply with FATCA irrespective of the conclusion of an IGA but may face constraints on their ability to do so under Canadian law.
It seems to me that primarily a problem for the Canadian government to solve, and not for the banks themselves. This is the reason why in my original post I suggested that the letter should really have been addressed to the Treasury.
@Blaze I can offer my own perspective as an immigrant from Canada living in the US–although I can’t speak for anyone else.
My interest in and potential support for Isaac Brock Society very much IS about ensuring that Canadian law–and only Canadian law–is upheld in Canada. Nothing more and nothing less. I don’t expect–in fact I don’t necessarily want–the Isaac Brock Society to be getting involved in issues that should be between the US government and its own residents living in the US. But I do want and support the Isaac Brock Society in fighting for Canadian law to remain the only law on Canadian soil.
Since my roots are in Canada, one never knows when circumstances may call me back to Canada for a short or extended period of time. If FATCA and the IGA go through, the implications seem to be that despite holding a Canadian passport, I might have great difficulty in transacting simple business in Canada due to my “US person” status. That’s a very scary prospect if–for example–I might need to serve as power of attorney for a Canadian who has no US connection at all. Or if I encounter a health problem of my own and decide that OHIP is better equipped than Obamacare long term to deal with it long term.
As long as I have roots in Canada–and I will for the rest of my life–the treatment of Canadians in Canada is of interest to me, no matter how long I’ve lived in the US and how deep a connection I may also feel in the US. And that is my interest in the Isaac Brock Society and in seeing FATCA and IGA resisted.
Quite simple isn\t it?
The banks are pushing Canada to change Canadian laws. The banks don’t like it that someone disagrees with what they are doing, and don’t want people to argue with them.
In addition, the banks intend to deflect the conversation by pointing out one individual of the hundred participants–implying that one individual is the driver of the others.
@J.E. Gutierrez I was one of those who worked with a wide variety of sources and reviewed significant amounts of information for writing the letter. The letter is a compilation of many comments made here and elsewhere. A lobbyist was a suggestions made by a Brocker here.
This letter was written after CBA posted here a number of times about how they have no choice but to comply with FATCA.
As Wondering pointed out Canadian human rights, privacy and banking laws all prevent a bank or other financial institution from asking us where they were born. The term “U.S person” has no legal meaning in Canadian law. If banks were making plans to identify Canadian citizens and residents as “Chinese persons,” “Russian persons,” “Eritrean persons” or “Iranian persons” and preparing to submit information to those nations, the government and media would have been all over it in a flash. But, it wouldn’t have reached that stage because banks themselves (I Hope!) would have immediately identified they would be contravening long-established Canadian laws and values to do that.
Also, as Wondering points out, we have the all the same rights as people born in those countries. Based on a consultation with one of Canada’s most prominent constitutional lawyers, we have learned If the banks violate our country’s privacy, banking and human rights laws, we have grounds for a lawsuit against the banks. If the government changes the laws for a foreign government, we have grounds for a lawsuit against the government. We will not hesitate to take that action if necessary.
The constitutional lawyer and his associate who consulted with us did not charge us for that consultation. I remain in contact with him. If legal action is necessary, he will, of course charge us his fees for representing us. Is that a conflict of interest for him? Of course not.
We have also consulted Canadian Civil Liberties Association (CCLA) and Canada’s Privacy Commissioner.
Yes, the letter suggests a lobbyist as one option for the CBA to use. They use lobbyists all the time. Why not for FATCA? The letter does not mention any particular lawyer. We made other suggestions to CBA about steps they could take to fight FATCA.
In terms of Mr. Jatras, he has been a great source of information to us. He has given freely of his time and has traveled to Canada at his own expense to help us.
You might want to note others are mentioned by name in the letter. These include Canada’s Finance Minister Jim Flaherty who has called FATCA “extraterritorial” and “unwarranted.” They include Canada’s most prominent constitutional scholar, Peter Hogg (who is not the lawyer we consulted) who clearly states FATCA and an IGA would violate our Charter. We offer comments from members of the Green, Liberal and NDP parties.
I myself have written numerous articles about FATCA for no remuneration. In each of them, I have identified myself as a Canadian citizen for 40 years who was born and raised in Pennsylvania. Does being affected by FATCA put me in some kind of conflict for writing those articles?
We have and will continue to use whatever resources may be available to us to ensure our fundamental rights as Canadian citizens and residents are protected in our country.
This letter is only one of many tools we are using in our efforts to fight this attack on us as Canadian citizens and residents. In fact, the vast majority of our efforts have been placed on the Canadian government. If you have any question about that, you may want to check with Finance Minister, Finance Canada, the Prime Minister, Foreign Affairs Minister, leaders and members of the Opposition and candidates for Toronto Centre byelection.
By now, most of them are probably very weary of hearing from us. I’m sure CBA shares that view.
I’m sure they thought by now we would have gone away quietly. That’s not happening. We are in this for the long haul (even though it’s turned out to be much longer than any of us anticipated!) They’re not going to wear us down. The longer this drags on, the more determined and united we become.
@Blaze and Mark Twain
Yep.
@ Mark Twain. And we all are expecting that response, there no doubt will be more of it, and as Blaze says, it won’t matter a damn. We aren’t going away, we aren’t giving up, and if this has to carry on into the 2015 election and into a Charter challenge in the courts, well so be it.
Three guesses why for the past two years I no longer have a cent in any bank in Canada, it’s all in credit unions (most of it was anyway before then). I’ve never trusted banks. But then I grew up in the prairies in a farming community and I have a brother-in-law and sister who are family farmers. Enough said, if you know anything about farmers’ attitudes toward the banks.
CBA has merely confirmed all my prejudices against bankers, in spades.
How is it that the focus was on Mr. Jatras when there were literally dozens of us who have been at this effort for two years here in Canada. We have got a great response from our MP’s and representatives. We’ve heard from the Greens, The Liberals, The NDP and others and not one of these parties is for FATCA. We’ve spoken to people in the streets face to face and personally I’ve not met ONE Canadian who thinks this is a good idea or good for this country.
It’s just curious to me that the focus would be on the actions of one member. Perhaps because that member appeals to the U.S as part of his efforts. That is fine but, I don’t focus on U.S. law. It’s Canada’s sovereignty and OUR Charter of Rights that concern me. We can no more start changing or trying to get round our Charter than the U.S. would change their constitution upon demand for us.
Most of us here don’t bother appealing to the U.S. since our roots and lives are here in Canada. We’re Canadians affected potentially by a U.S. law shoved over our border. We’ve had a great response from our politicians here, from our fellow citizens too. Nobody wants FATCA here and if the U.S. were not arm twisting it would have been dead in the water a long time ago.
to: J.E. Gutierrez
You say that the banks can’t reject a law . They don’t have to. It’s not a law here in Canada.
It is an American law. They should act like there is no FACTA because in Canada there isn’t a FATCA law.
In some countries around the world , women can’t vote, and years ago it wasn’t illegal in some countries
if you killed your wife if you didn’t like the way she dressed . Because that was their law, should we race around and spend 100 million to implement one of those laws because a foreign country did it. No, we would think they are nuts and thank god we don’t have to implement laws from other countries. Why is this any different. It is a U.S. law, and that is where it should stay. Canada can and should ignore it.
Then people say if we ignore them they will withhold 30% on our Cdn banks. If they do, just withhold 35%
on them.
@”FATCA dump”
It’s a tangential point but I would put something you’ve said even more bluntly: Sharia Law has exactly the same standing on Canadian soil as does FATCA. Which is to say–absolutely no validity whatsoever.
The difference is those who wish to uphold Sharia law don’t threaten Canadians who choose not to with extortion – all the while telling us they’re our ‘friends’.
That’s an excellent point FATCAdump, it is a U.S. law made in the U.S. congress. Canada has a border, it’s own laws and it’s own government yet the U.S. is behaving as if any law they pass and bully Canada into is the “law” here too. In fact this particular U.S. law violates the laws of Canada. Something the U.S. has shown zero respect for.
“t I suggested that the letter should really have been addressed to the Treasury”
The U.S. treasury was given a report from Nina Olsen on these matters and ignored her. They were also given submissions through congress by ACA and that too was ignored. Except following these appeals the Treasury called our issues a “Myth”
There is no point whatsoever in appealing to a government that is not our own, that has zero concept of who we are, who our families are and does not care. As far as appealing to the Canadian government read up for a while. We have been doing this with some success and will continue to do so.
You say this is a problem for the Canadian government. The only problem here is the United States making laws that violate our laws and expecting Canada to “solve” that “problem” It’s a U.S. law and a U.S. problem. There is no reason any institution in Canada should be seeking to “solve” anything to do with FATCA when the only respectable answer for Canadians is “No”
@All
This discussion is all over the place.
The bottom line is that the U.S. is interfering in the internal affairs of other countries. It sends its drones into Pakistan and it’s sending the IRS to Canada.
FATCA is intended to operate:
– in an extraterritorial manner in Canadian jurisdiction
– regardless of whether it conflicts with Canada’s laws
– by forcing compliance at the expense of the banks and citizens of Canada.
All of this is running roughshod over the rights of Canadian citizens.
If the banks want to collaborate with the U.S. that’s their choice, but surely they can’t complain about being publicly identified as being the “collaborators” that they clearly are.
It’s like this:
You are either with the IRS entering Canada or against the IRS entering Canada.
Looks like Mr. Campbell is extending a warm welcome to the IRS, when he actually could down in Canadian history as the “FATCA Terminator”.
Focus on what FATCA does! Not so much HOW it does it!
@J.E. Gutierrez
Even without Canada’s Charter of Rights the banks are clearly in violation of provincial human rights codes which prohibit discrimination based on citizenship or national origin.
It’s like this:
An IGA will conflict with Canada’s Charter of Rights.
Without an IGA the banks will violate provincial human rights codes.
Rather than decide which of Canada’s laws to violate, Mr. Campbell and company might (imagine this) resist the invasion of an extremely aggressive, debt ridden delusional foreign government.
But, hey that would require them to take a principled stand. What do you think? Can they do that?
I
@USCitizenAbroad: Banks do not fall under the jurisdiction of provincial Human Rights Code. They fall under the jurisdiction of the federal Human Rights Act. That also prohibits discrimination based on national origin.
Credit unions fall under provincial Human Rights Code.
Bottom line, it is illegal for banks or credit unions to discriminate against us or even ask us where we were born under Human Rights, privacy and banking laws.
That should have been the end of the story more than two years ago.
I’ve said it before and I’ll say it again:
Let’s note that Bill Gates, whom I’m sure is a good guy owns something like 12% of CN Rail (as of December 2012). Carl Icahn has bought about 6% of Talisman Energy……need I go on? If we just “discussed” out loud the possibility of withholding 30% of any sale by these gentlemen of their stake in these companies, you can bet the level of attention the media and the USG would give would increase exponentially. Yes, we need US investors for sure, but they can be easily replaced with Chinese etc…. (wow, the USG will love to hear that). Are you listening Jim Flaherty?
@Blaze
Is there something in the Ontario Human Rights Code that says that it does not apply to banks? No reason it can’t be covered by both. The reason that the banks want the IGA so badly is because it will make their discriminatory behaviour legal because they are following Canada’s laws.
This opens the door to the argument that the IGA itself violates Canada’s Charter of Rights.
Canadian Human Rights Act covers banks, federal government, transportation, broadcasting, Canada Post and a few others that fall under federal jurisdiction. About 10% of organizations fall under federal jurisdiction.The remaining 90% including credit unions fall under provincial laws.
If you call the Ontario Human Rights Commission, they will be able to tell you they don’t have jurisdiction over banks. The Canadian Human Rights Act covers them.
For our purposes, it doesn’t matter, Discrimination based on national origin is prohibited.
What is important is that we know we can support what we’re saying by applying the right law to the situation.
An IGA won’t change Canadian law. The government would have to specifically change the law to allow the banks to comply. If the government does that, then we have a violation of the Charter.
As you know, I am not a lawyer. However, I often feel like I could have earned a law degree in the time and energy I have put into fighting this for two years. It would have been time much better spent!
@Blaze
A quick Google search will reveal that certain Canadian financial institutions have had a policy of discriminating against “US persons” in Canada with respect to certain financial products that dates back from before FATCA. See for example the following document from 2007:
https://www.cibc.com/ca/pdf/investor/reg-capital-instruments/600mm-6-due-jun-6-2023-pricingsupp-english.pdf
It says:
“The medium-term notes to be issued hereunder … may not be offered … to … a U.S. person ”
Is there any reason why action under the Canadian Human Rights Act has not already been taken? This approach by the Canadian banks seems like it cannot be pinned solely on FATCA if it began as far back as 2007.
@Dash1729
Perhaps very few “US Persons” tried to acquire any of those notes. I would think the difference here is likely to be a matter of exposure/awareness.
Will take a look and see what else might pop up, as you’ve suggested.
Would be interesting to see what would actually happen if a dual Canada-US citizen tried to purchase one of these products.
@tdott and Dash1729 and Blaze,
It’s the same WARNING STICKER that SHOULD BE on Canadian “registered” accounts but is not. And, it’s all discrimination on who is allowed to invest in what accounts.
http://isaacbrocksociety.ca/2013/11/02/help-appreciated-for-nov-13-14-toronto-protest-against-fatca-complicit-banks/comment-page-5/#comment-649568
http://isaacbrocksociety.ca/2013/11/02/help-appreciated-for-nov-13-14-toronto-protest-against-fatca-complicit-banks/comment-page-6/#comment-650528
http://isaacbrocksociety.ca/2013/11/02/help-appreciated-for-nov-13-14-toronto-protest-against-fatca-complicit-banks/comment-page-6/#comment-655315
In my infinite and just learned ignorance, I have purchased many of these products, in my case various banks/lifeco preferred shares. The problem shown by Dash1729 is not unique to CIBC. It’s the same at RBC etc. Your post caused me to investigate. Great! Yet another reason to get financial cancer surgery (US citizenship renunciation).