This prompted me to write a reflection, which Petros has asked if I would post here. It did NOT attract any attention there, so might as well. LOL.
In a quick synopsis I make the connection of UBS being the triggering mechanism for FATCA and the global GATCA, mostly unreported in U.S. media. I have some thoughts about what this might mean for regulatory overload as more and more is piled onto small and medium sized financial institutions that can not keep up. When will the full FATCA blow back happen in the USA, and what will the impact be?
Nothing earth shattering in analysis, or insight. It is just something that has fascinated me. I have been watching for a long time. We are well down the road now to a global dragnet and the total surveillance state. It is dressed up by Progressives, OECD elites and the Tax Justice types as some desired dream state of financial transparency for ALL. For me, it seems like a nightmare. How regressive, dare I say repressive, will these Progressives types be in pushing their GATCA agenda?
I have reproduced my comment below with some tweaks. Might edit it more later, but off for 3 day back packing trip and wanted to post before I left.
I hope you will humor me for a minute. This is not a rage, but a perspective that arises from this article. It is almost amusing now that France is getting worked up about UBS. You could ask, what took them so long? The question that arises, is what will happen, in practical terms?
We know the history in the USA.
Rage at UBS in the States led directly to what I call Congress’s FATCA FATWA with it’s Treasuries Offshore Jihad and many iterations of the IRS OVDP.
More ominously, and mostly ignored in the US media, FATCA has begat a global GATCA. This is the OECD Common Reporting Standards (CRS) that David Jolly so benignly mentions in one sentence.
It is modeled on FATCA, although in many ways more restrictive and less loopholes, and does not have income thresholds. It is residency based and not Citizenship based, and doesn’t have the coercive sanctions that FATCA has. It is a voluntary program, unlike FATCA, where FFIs really have little choice but to comply if they want to use the USD for international transactions, and they ALL do.
GATCA IS A BIG DEAL! I have not seen it covered in any U.S. mainstream media, yet. It deserves more attention than the meager lines that David Jolly wrote.
For those that don’t know what it is, here is some analysis by William Byrnes, an academic type.
FATCA evolving into global GATCA has taken the dragnet approach to stopping tax evasion to a new level, and way beyond the wild dreams of its creators who wanted, as Max Baucus said of U.S. taxpayers, to “stop tax dodging once and for all”
Really? Once and for All? Is that even possible?
Is GATCA the best way to accomplish the mission at a global level? What are the consequences that will naturally arise when millions (billions) of people begin to make individual decisions related to this dragnet reality.
A stream confronting a rock finds a way to flow around it, and I am not sure, given the nature of man, you can ever pile up enough regulatory rocks in the way of human economic activity to create a dam to control all flows, (once and for all) without a lot of upstream consequences.
Looking back, it might never have happened if not for the stupidity (criminality) of UBS combined with the evasion demand from rich U.S. homeland taxpayers. The regulators, DOJ and the IRS didn’t find it, it was exposed by a whistle-blower. This happened right at the time a new idealistic Administration was coming to power with all its plans for ‘Fair share spreading the wealth’ , whatever that means, as a progressive taxation approach. As part of this, it made promises to go after offshore tax evasion.
True to his promise, Obama launched his jihad as a ‘Simple Premise’ of some type of 1099 foreign bank reporting which has evolved into global programs of enormous complexity with many unknown consequences.
Here is where it was announced.
We are where we are today, with FATCA in place, and GATCA breathing down the throats of the global citizenry, because of this little remembered Obama moment.
FATCA is now creating an IRS ‘formageddon’ with what is being required of FFIs around the world. They have to fill out U.S. concentric forms to “cure’ (regulatory term) the disease of U.S. indicia of their customers.
I don’t think most observers know the magnitude of changes in customer outreach, due diligence and financial review that is going to be required. It is called CDD in the trade as explained by Haydon Perryman in his 4th GATCA podcast. The levels of intrusive customer questioning, form filing and tax supervision by FFIs is going to be stunning. FATCA is definitely deputizing them to be an enforcing arm of the IRS.
But frankly, these details are all too boring for the average person to get their brains around, and so it is left to the legions of financial compliance elites to spread the word of the requirements.
As I have quoted John Oliver before, “If you want to do something evil, hide it is something very boring”. FATCA with all its boring compliance instructions is “Mission accomplished”.
Going back to UBS…
But this was a political and ideologue mission, so none required. In many ways, it is how we got the Patriot Act after 9/11. The NeoCons were just waiting for the crisis, as it was written and ready to go in short order after the towers came down.
But everyone knew there was a Patriot Act, although few knew total surveillance was inside it. The global FATCA sanctions and financial surveillance program was created in more stealth than the Patriot Act. It was without any knowledge of the citizenry, or even the knowledge of the majority of the Congressman that voted for it. A stunning development, in retrospect.
It, combined with many other new financial regulations arsing out of the financial crisis, and other anti terrorist money laundering initiatives that arose out of 9/11 is creating a world where global financial activity is becoming more and more restricted with a level of regulation complexity and cost that would heretofore be unacceptable.
In case you haven’t been aware, there has been a global financial war raging for some time. It is under the direction and control of U.S. Treasury. I don’t think many have recognized the full impacts of this mission. Treasury is using US financial might and USD domination to get the world to bend to America’s will.
If you haven’t, you really should read Treasuries War.
All of this has consequences and collateral damage, but you have to assemble the pieces to begin to see the whole.
Here is one. Look at what is happening with poor immigrants in America from this recent New York Times Dealb%K article…
Now, alarmingly, but without much media attention, FATCA (just another facet of the broader financial war) has evolved into a global GATCA which assures that all personal privacy is lost in the total surveillance world that America is creating.
That loss aside, you have to wonder, how many more pages of regulations will be heaped onto the pile created since 2008, before we totally choke off most small to medium financial firms and leave only the Too Big To Fail (TBTF) financial institutions with their implied government guarantees that come at tax payer expense? How can the small competition to the Big Guys keep up with the expensive and onerous compliance demands of governments?
Look at these graphics, in the Avalanche of Regulations. I would NOT want to be a compliance officer at my local bank.
Notice, when you look at these regs, FATCA is NOT listed. It is still to come, which gives rise to the question of when? When will FATCA finally blow back onto America shores in a form of a domestic DATCA? We are told that the US President will sign up to GATCA in September in Cairns, Australia at the G19( G20-Russia) summit. Does that finally force the issue in the USA?
What impact will all those 1000s pages of new DATCA/GATCA regulations, and complex reciprocity reporting requirements have when added onto the USFIs regulatory and compliance plate as shown in the ABA graphic above?
DATCA would place onto the homeland financial institutions the same onerous FATCA regulations we require of the world. This is necessary to meet the IGA reciprocity promises that Treasury has made. It was the carrot to make the 30 % withholding sanction medicine go down.
To do anything less is hypocrisy of the first order. It is well noted around the world how the USA protects its own tax haven status.
Will FATCA which has now evolved to a global GATCA result in a domestic DATCA? Or, will the USA end up being the last Tax Haven standing when it refuses to go along?
Was that by design or accident?
I don’t think Congress as currently constructed, will knowingly go along with GATCA or DATCA, but would I bet on it? I never underestimate the current set of ideologues in power, which I call the FATCAnatics, to find a vehicle to enact this by stealth.
Time will tell what the unintended consequences or financial collateral damage will be from the criminal actions of UBS and the resulting prosecution, but FATCA / GATCA have certainly been the direct result.
Not sure when DATCA will happen, but if it doesn’t, it won’t be for for lack of effort by this administration. DATCA is buried in the Obama FY15 budget on page 203.
Read it yourself.
One after thought…
Keep an eye on the Corporate inversion issue and any legislation that might result from the outrage that is being whipped up in the name of Patriotism. I have an uneasy feeling that this has enough populous appeal, it could be the means for imposing DATCA by stealth. I hope I am wrong. This is just speculation on my part, but stay alert.