This new post very well illustrates a lot that is in John Richardson’s presentation posted HERE.
Despite the good works of those at this site and others, I remain gravely concerned. Yesterday I attempted to inform my colleagues at a school we teach at in Japan of the situation we are all in by telling them about the experiences of a friend of mine. I prefaced the “discussion” with an email compilation if this friend’s emails to me on the subject. Following these, I have added my email to him telling him of the reaction I received.
Before that, however, it may be best to let you know a little about who I am. I am an American citizen who has lived most of my adult life in Japan. My spouse and our toddler are Japanese. I became aware of this problem around two years ago when applying for a new passport. There were statements on the application that I knew to be illegal. Searching into that issue lead me to your website and, well, you’ve been there, you know the rest.
This is today’s summarization, asking for input, corrections, etc. from other readers here. He says “Tear it apart.”:
Here is a summary I came up with from memory. My notes are unavailable to me while on the trains and subways of Tokyo, when I have time post.
Tear it apart! Any inaccuracies correct. I need this as spot on as possible.
Some time ago American bankers constructed a money transfer system that functions well enough and is secure enough that it is reported to be the most commonly used route to transfer money across borders. It functioned so well that it was cheaper for bankers in other countries to pay to use this system to move money than to build their own. If I want to send money from my bank here in Japan to someone in Germany, it will most likely pass through the US on its way. Buy something online from Spain, the credit card payment goes through this system. Vacationing in Thailand or Europe and go to an ATM to pull out cash, your money most likely passes through this network set up by American banks somewhere along its way to you. The US government has hijacked this system.
In 2010, President Obama signed the HIRE act into law. Attached to the bill was the required method of funding. In this case The Foreign Account Tax Compliance Act (FATCA) is the method of funding.
FATCA requires all foreign (from the perspective of the US) financial institutions (FFIs) to report all monthly financial activity of US Persons to the US Internal Revenue Service (IRS). FFIs include banks, investment firms, insurance companies, pension funds and others.
Who exactly are “US Persons” has not yet been defined despite reporting having started on October first of this year, but do include the following; all US citizens and many who once were a citizen of the US (So, even if I had become a Japanese citizen, I would still be a US Person.) their spouses, regardless of their nationality or residence and any children from such a union regardless of place of birth and/ or residence. Anyone who works for an American founded corporation is also a US Person. It was very recently reported that there are a record three million American citizens born in the US who now live abroad. The US government estimates that there are six to seven million US Persons living outside the US who are subject to US tax law. Who are these 3 to 4 million US Persons?
Any FFI that doesn’t dance to Washington’s tune will be charged a noncompliance fee of thirty percent (30%) of any amount sent to, from, within or through the US. This would cause severe damage to the financial industry of any nation and possibly be fatal to some. But how can the US enforce this? Remember that the most common way to transfer money around the world has been hijacked by the US. In a word, extortion. My government is extorting the world.
Compliance is not cheap, however. The president of Canada’s largest bank and at least two banking organizations with in Europe have estimated the cost of the new computer system needed to comply with the reporting requirements to be $100,000,000 per large bank.
Knowing that is illegal in most countries for FFIs to give such information to anyone, especially a foreign government, without some kind of due process, the US Treasury Department will allow foreign nations to enter into InterGovernmental Agreements (IGAs) in which the signatory nations would agree to amend or bend their laws to allow their financial institutions to comply with these dictates from Washington. In return, Treasury will allow FFIs to report to their own governments which would then forward the information on to the IRS, thereby greatly reducing the financial burden on the individual banks. Faced with a choice between paying an additional 30% in fees for any money transfer across borders or buying a $100,000,000 reporting system in the absence of an IGA, bankers petitioned their governments to sign the offered IGA or risk financial collapse.
These IGAs violate not only the laws of the nations signing them with the US, but also, most likely international law and certainly do violate US law as well!
What must be reported? Although the reports are sent annually, FFI’s must report the highest monthly balance within any account held by a US Person in Dollars. This is a momentous task. Even if the balance remains the same in the local currency, exchange rates fluctuate daily. This requires a daily calculation of an account’s balance in dollars. Insurance companies and pension funds are also required to report the highest monthly value in US dollars of all policies and accounts held by US persons.
Banks simply do not have the resources to perform this task and risk the penalties stated above if they misreport. Thus, banks in Europe and around the world are now forbidding Americans from opening new accounts and closing the accounts of current US Person account holders.
Yeah, well so what, I’m not an American. It doesn’t effect me. You sort out your own problems and leave me alone!
Not so fast. By signing IGAs with the US, all signatory nations also agreed to exchange information amongst themselves. So, the UK agreed to also exchange all financial data of not only Japanese citizens who have accounts in the UK but of all Japanese residents. And so too did Japan agree to report to the UK all British nationals and UK residents who have accounts in Japan. And thus it is for all nations that have signed IGAs with the US.
This is how a friend of mine living just outside Tokyo, Japan, a British national has had his accounts in the UK closed. His now former banks have to report to the Japanese government and the reporting is too cumbersome to be bothered with. Likewise, he is experiencing great difficulty with his accounts in Japan as they have to report to the UK.
ARE YOU prepared for life without a bank account, insurance and pension?
My comment yesterday:
Thank you, Japan T, for your comment and your description of reaction of others to the subject of FATCA. I agree as many will here:
How do we, I, get such people to listen? They have no patience for anything that might upset their world view, just bat everything aside and reply in a manner that has nothing to do with what was just said. By the time it’s a reality to them, it will be too late. I have offered them this website’s address, none have bothered to check it out.
The importance of the information in the post of this particular thread and what you describe should not be overlooked. I think many have not taken their view past FATCA to GATCA.
Approaching GATCA? “Foreigners” (and not just U.S. foreigners) in Israel finding themselves ensnared …
P.S. THIS ARTICLE IS CERTAINLY RELEVANT: FATCA Costs on the Rise (Economia, November 2014).
Don’t give up trying to educate others. We must not!