The law of unintended consequences remains far more powerful than any half-baked legislation coming out of Washington, as this article from South China Morning Post reminds us:
Fatca regime may have unintended consequences for financial system
Crackdown on Americans’ money in overseas accounts may lead to the growth of shadow banking and the financial power of other countries
Many financial institutions are still completely confused and unable to comply with the US government’s Fatca regime. “Foreign Account Tax Compliance Act” sounds like another innocuous tax regulation. But it represents the most ambitious tax and personal data collection strategy in financial history. It will embolden and encourage more global intrusions by US government agencies. More people will be driven underground to seek shadow banking services.
Fatca is controversial because it dramatically shifts the burden of disclosure from the American person to their banks. Foreign financial institutions are now more than just tax bounty hunters for the US Internal Revenue Service (IRS), but pawns in an historical power play for control over the global financial system.