20 thoughts on “Russia’s plan to apply counter-sanctions will include a welcome ban of FATCA compliance industry”

1. @Petros

   Thanks for finding this.

   This is incredibly significant. What it says is:

   Russian Legislation

   Fedorov, a member of Duma’s budget and tax committee, said the legislation has been drafted, and he is awaiting other lawmakers to sign on. He said he plans to submit it to the Duma and government this week.

   “These are not sanctions against U.S. We don’t have a goal to harm U.S. citizens’ quality of life,” Fedorov said. “There are companies in Russia which have sensitive positions in terms of Russia’s sovereignty and economic security.”

   Fedorov said consulting firms and audit firms will be the first to be targeted by the new bill. Next will be U.S. media, he said.

   “It doesn’t matter whether this is a state or a private company,” he said. “If the official position of U.S. authorities is to inflict maximum damage on Russia, then it will have to inflict maximum damage on Russia.”

   Russia’s military intervention in Ukraine in March, the annexation of Crimea and the downing of a Malaysian commercial airliner on July 17 — which the U.S. said was probably caused by a Russian missile — has evolved into the deepest crisis between Russia and the U.S. and Europe since the Cold War.

   Russia is recognizing what we have all learned, which is that the U.S. government uses its citizens abroad and it’s companies to damage the interests of the host country.

   We know that this is what is the effect of citizenship-based taxation. This is the first acknowledgement of this reality that I have seen from a non-U.S. government.

2. Ultimately it comes down to two kinds of nations in the world: those aligned with the United States who become protectorates of the US who when told to jump ask how high (Stephen Harper); or independent nations that will begin a new world financial system which shuns the US dollar, causing the dollar to collapse. See now also, http://www.zerohedge.com/news/2014-07-31/russia-and-india-begin-negotations-use-national-currencies-settlements-bypassing-dol

3. Eventually, Obama will have to pass sanctions against other countries who trade with Russia too. Otherwise, who cares? Europe has said that they will do sanctions against Russia, but keep buying natural gas. I guess they don’t want a very cold winter.

4. Russia is recognizing what we have all learned, which is that the U.S. government uses its citizens abroad and it’s companies to damage the interests of the host country.

   And Fedorov, a member of Duma’s budget and tax committee, says

   “These are not sanctions against U.S. We don’t have a goal to harm U.S. citizens’ quality of life,”

   Which country is more HUMANE, for their country as well as ALL who live there?

5. Bravo. The issue is that I am sure those US corporations have hired locals, so that it will be the Russians losing their jobs. This would apply to Canadians as well if we tried the same sanctions. But I like the spunk and wish we had more of a backbone!

6. Tangogirl, don’t lament lost jobs of people who don’t create wealth but rather are parasites to the actual job of the economy to make the nation more prosperous. Remember Milton Friedman’s question, why don’t they use spoons instead of shovels, if the sole purpose of an activity is job creation (see e.g., http://quoteinvestigator.com/2011/10/10/spoons-shovels/ ). Or the broken window fallacy of Bastiat. People who don’t spend money on the compliance industry will spend it elsewhere, making for a more vibrant economy in Russia. Parasites like the US compliance industry ultimately destroy the vitality of the organism.

7. @All

   Well, it’s one thing to shut down consulting firms’ operations in Russia or anywhere else (China is considering the same thing — largely for security reasons) and see who gets fired. But more important is not following their “advice,” which does not benefit their clients, IMHO. The following is aimed at Russia’s specific circumstances but broad brush is applicable to other countries as well:

   http://en.ria.ru/authors/20140725/191441744/Moscow-Must-Close-a-Yawning-Gap-in-Its-Financial-Armor-.html

8. US chicken has bleach?

9. @Bubblebustin

   US chicken has chicken?

10. @Jim Jatras. Almost writing incredibly pity articles faster than one may read them. On fire!

    Your recent one on Russia: the argument might be reinforced by tying in the BRICS summit: http://www.bloomberg.com/news/2014-07-14/brics-fight-waning-clout-with-150-billion-deal-in-brazil-summit.html global effort on bypassing use of the USD.

    I did write to McCain to suggest that he not use FATCA against Russia as this would only hurt Americans there, and make all the other banks in the world a bit more nervous than they already are and FATCA and US citizens. I suggested to him to use highly targeted measures on Russia that would not hurt American citizens.

    Possible theme for a future article: China. Economically China has much greater attention of the world than Russia. How are they reacting to FATCA, what are they doing to get around usage of the USD when they only own several trillion dollars of US Treasury bonds.

    Just from the foot soldier: May we have it all really simplified and in slogans about the negatives of FATCA and citizenship based taxation – so that we may spread the message in regards to a issues ‘that most people have never heard of” and are incredibly complex.

    Also, I would like to have a good argument for Democrat friends and family. Perhaps starting as follows: The Democrats have been known as the party of compassion. However…

11. Re: ban on compliance industry. That will not help Americans and American businesses in Russia comply – perhaps the rates will now go sky high for this advice. It is not going to change the compliance rules.

12. Jc… Fatca will not make it to all countries while the dollar diminishes.. It is a illegal overreach ..In the long term doomed to collapse

13. LOL, Deckard1138. There’s plenty enough chickens to go around here in Canada, at least in the Harper government and the banking industry.

    @Jim, although FATCA requires they smoke them out, wouldn’t FFI’s letting US customers go at least lessen the ongoing cost of reporting them? I have to imagine that would be significant in the long run.

14. @Deckard1138

    Whisperings overheard between our feathery friends in both the Harper government and the Canadian banking industry prior to the passing of Bill C-31:

    “Shhh…pass the buck-buck”

15. Another related article from Bloomberg:

    http://www.bloombergview.com/articles/2014-07-31/if-i-was-a-russian-company-i-d-avoid-dollars-too

16. @JC

    Re: “Possible theme for a future article: China. Economically China has much greater attention of the world than Russia. How are they reacting to FATCA, what are they doing to get around usage of the USD when they only own several trillion dollars of US Treasury bonds.” Yes, I did mention China in passing in the Russia article. Unfortunately, media reporting about China (in English anyway, I assume Chinese-language stuff is worse) mechanically repeat as establised fact the mantra that China would receive “reciprocal” information. I have no idea how to break through that information barrier, at least without money. In Russia, I have some avenues (I hope).

    @bubblebustin

    Re “@Jim, although FATCA requires they smoke them out, wouldn’t FFI’s letting US customers go at least lessen the ongoing cost of reporting them? I have to imagine that would be significant in the long run.” Maybe, but I doubt it. At the macro level, the cost to FFIs is the complex due diligence they have to put in system-wide to identify the accounts, not necessarily how many accounts they find. In general, dropping US business seems to be just a panic reaction, not the result of arithmetic of gains and losses.

17. Probably this is one of the reasons why the HKD’s been banging against the top of its peg range so much recently:

    Russian groups convert cash reserves
    http://www.ft.com/cms/s/0/418b5f98-18c9-11e4-80da-00144feabdc0.html

    Large Russian companies are moving some of their cash holdings to Asian banks as the latest sanctions from the US and the EU have raised fears that Russia could eventually be completely shut out of US dollar funding markets … Megafon said it had decided to move 40 per cent of its cash into Hong Kong dollars and to Chinese banks because Hong Kong’s currency was “an effective proxy for the US dollar even in times of market disturbances” and because having Hong Kong dollars “at hand” in a Chinese bank made settlements easier with Huawei, the telecom equipment provider that won a large contract from the company last month.

    Russian executives and bankers said Chinese banks were most likely to benefit from heightened fears about a complete dollar transaction ban because they were regarded as the least likely to comply with western sanctions.

18. Though I dislike Putin policies for other reasons, it is refreshing to see that somebody has the balls to tell the US where to cram it.

19. As for FATCA penalties, the obvious solution is to compensate victims by seizing US overseas assets and handing em out.

20. Bloomberg cites anonymous source claiming Norilsk Nickel is also moving funds into Hong Kong. Monetary Authority still selling billions of HKD to keep the lid on the peg:
    http://www.bloomberg.com/news/2014-08-04/hong-kong-intervenes-to-defend-peg-amid-russian-cash-speculation.html