41 thoughts on “Update from Credit Union Central of Canada on Budget and #FATCA”
@Tim. Yes, I am familiar with it. It is just south of the YVR ferry terminal. I have never driven out there, although I have sailed close by years ago. I saw that National Post story when it came out, but have no information to add about Sterling Bank… I bet the petro stations just north of the border don’t like the enclave. 🙂
@Tim and Just Me
My oldest son’s best friend was raised in Tsawwessen, literally a walk down the street to Point Roberts. Point Roberts really should belong to Canada.
An interesting item was in our papers (Vancouver papers), sometime in the last year. They reported on a North Vancouver man who had owned a place at Point Roberts for more than a generation. He frequently went down to his place there. Border guards had been hassling him more and more frequently and he had even been denied entry to the US at one time. The hassles all had to do with tax issues, where was he actually resident etc etc. They had gotten so hostile toward him, he made the decision to sell his place at Point Roberts rather than put up with the border guards any longer.
Five-year ban prompts man to sell U.S. home
Vancouver Sun (7 May 2011) A8
Thanks for posting the link to the story. I remember some of the details but not all of the details (have more and more senior moments these days!). Those border guards can sure be nasty!
I put a call in today to CCU but was unable to reach the person I was directed to. However, I think I understand now, why credit unions will most definitely be included in FATCA.
While most credit unions do not, on their own, offer investments in mutual funds and the like, many rely on Credential Financial-Credential Securities Inc. Credential Financial is owned by the Provincial Credit Union Centrals & CUMIS (owns 50% and represents insurance business via credit unions). The Provincial Credit Union Centrals are owned by credit unions in the corresponding province. So it would seem that the companies are tied, financially and legally and so Credential is the defining point as they deal in US funds, securities, etc.
If this is the case, I cannot understand how Alterna would be able to refuse to comply with FATCA.
If they do, they violate Canadian laws, as will all the banks!
Rest assured, credit units will change their structures to avoid all this and gather in millions of new customers from the chartered banks.
I have spoken with the President and CEO of my credit union. He thinks the credit unions will have to comply with FATCA as they do have mutual funds and other US investments. He does not know how they will be able to do this without violating Canadian laws.
He’s “hoping common sense will prevail.” Aren’t we all? Unfortunately, he probably doesn’t know the Americans like we do!
700,000+ people we are dealing with. It cannot happen.
up to $1,000,000 bazlance, “electronic search” I have no identifiers in my credit union files, electronic or paper.
@nobledreamer;
I spoke with my credit union too. No definitive information, but they are going to have someone that deals with ‘compliance’ issues call back. Same for contacting a large pension plan – to urge that they at least share with members what their current situation and lobbying efforts are, and to alert members to investigate whether they may need to consult with someone qualifed re their potential exposure and options re FATCA. Now, rather than afterwards.
If any of you feel that you can speak with your credit unions and group pension plans, and underscore your concerns about privacy under Canada’s laws, the plan and CU fiduciary duties to members, and lobbying Flaherty to continue to hold out – that would be great. You can ask to speak to someone who deals with ‘compliance’ issues. An important point to make is that single citizenship Canadians are also affected – as per green card holders, snowbirds, etc. and as our joint account holders, and beneficiaries. If your joint account holder or adult beneficiaries is a single citizenship Canadian, they can call too. Making it clear that the effect goes beyond single individual account holders with US citizen designations. There is still more than a hint of the attitude in some quarters that this is of concern only to US citizens who happen to move up here – and so the thinking is that it is not of concern to substantial numbers of ‘Canadians’.
@badger
very good layout of all the points to make. Thanks!
As to your last point, I believe a substantial number of “Canadians” will begin to be concerned when they realize why their bank fees, service charges and so on, will be raised so their institution can pay for the costs it incurs in order to be in line with FATCAT.
@Everyone
The whole issue with credit unions and FATCA is still very much up in the air. I would say Credential Funds and CUMIS are the ones with a real problem more than individual credit unions such as Alterna. Alterna’s is a multiple billion dollar operation and their auditors are Price Waterhouse Coopers. I don’t think the would come out and just say they aren’t participating without some actual legal analysis of their position. I also think it given the lack of management cooridination(i.e. I don’t think Credential can force Alterna as an independent legal entity to comply) it is an open question to what extent Alterna and Credential/CUMIS are affiliated entities. The other issue is the requirement for all affiliated entities to comply doesn’t come into effect until 2016.
Here is an additional link below to some information on how credit unions along with Credential might be able to qualify for FATCA-lite status without having to provide information on “US Persons”.
My understanding of today was based upon reading that credit unions own the credit union centrals who own a portion of Credential. While Alterna may not be a “partner” credit union with Credential, there is still a legal financial tie via Credit Union 1.
I believe an earlier post I made (perhaps on the old Forum, I can’t remember anymore) was based upon an earlier “Policy and Advocacy Report” of CCU from June 2011. This is the info that produced uncertainty:
“It would appear at first glance that this new legislation would have little impact on most Canadian credit unions because, although they may have U.S. accountholders, credit unions do not ordinarily have U.S. source income to which the 30% withholding tax could be applied. However, discussions with Deloitte and others in the financial services industry suggest it is not that simple. There may be implications for the credit union system in at least a couple of areas:
(i) connected party rules may join credit unions and their affiliates, such as Credential, Ethical Funds and CUMIS, causing withholding tax issues for the affiliates if credit unions are not compliant; and
(ii) other FFIs may require credit unions to provide evidence of compliance with FATCA in order to transact business.”
Even if Alterna somehow is not connected to Credential, it may be that they fall victim to (ii).
Not trying to be argumentative, just seems that the issue of “connected party rules” needs more investigation. And even then, (ii) may seal their fate.
@Tim. Yes, I am familiar with it. It is just south of the YVR ferry terminal. I have never driven out there, although I have sailed close by years ago. I saw that National Post story when it came out, but have no information to add about Sterling Bank… I bet the petro stations just north of the border don’t like the enclave. 🙂
@Tim and Just Me
My oldest son’s best friend was raised in Tsawwessen, literally a walk down the street to Point Roberts. Point Roberts really should belong to Canada.
An interesting item was in our papers (Vancouver papers), sometime in the last year. They reported on a North Vancouver man who had owned a place at Point Roberts for more than a generation. He frequently went down to his place there. Border guards had been hassling him more and more frequently and he had even been denied entry to the US at one time. The hassles all had to do with tax issues, where was he actually resident etc etc. They had gotten so hostile toward him, he made the decision to sell his place at Point Roberts rather than put up with the border guards any longer.
Five-year ban prompts man to sell U.S. home
Vancouver Sun (7 May 2011) A8
http://www.canada.com/vancouversun/news/westcoastnews/story.html?id=d4cd7acc-c01a-47bf-8cae-ccbd06ff11d4
@usxcanada
Thanks for posting the link to the story. I remember some of the details but not all of the details (have more and more senior moments these days!). Those border guards can sure be nasty!
I put a call in today to CCU but was unable to reach the person I was directed to. However, I think I understand now, why credit unions will most definitely be included in FATCA.
While most credit unions do not, on their own, offer investments in mutual funds and the like, many rely on Credential Financial-Credential Securities Inc. Credential Financial is owned by the Provincial Credit Union Centrals & CUMIS (owns 50% and represents insurance business via credit unions). The Provincial Credit Union Centrals are owned by credit unions in the corresponding province. So it would seem that the companies are tied, financially and legally and so Credential is the defining point as they deal in US funds, securities, etc.
If this is the case, I cannot understand how Alterna would be able to refuse to comply with FATCA.
If they do, they violate Canadian laws, as will all the banks!
Rest assured, credit units will change their structures to avoid all this and gather in millions of new customers from the chartered banks.
I have spoken with the President and CEO of my credit union. He thinks the credit unions will have to comply with FATCA as they do have mutual funds and other US investments. He does not know how they will be able to do this without violating Canadian laws.
He’s “hoping common sense will prevail.” Aren’t we all? Unfortunately, he probably doesn’t know the Americans like we do!
700,000+ people we are dealing with. It cannot happen.
up to $1,000,000 bazlance, “electronic search” I have no identifiers in my credit union files, electronic or paper.
@nobledreamer;
I spoke with my credit union too. No definitive information, but they are going to have someone that deals with ‘compliance’ issues call back. Same for contacting a large pension plan – to urge that they at least share with members what their current situation and lobbying efforts are, and to alert members to investigate whether they may need to consult with someone qualifed re their potential exposure and options re FATCA. Now, rather than afterwards.
If any of you feel that you can speak with your credit unions and group pension plans, and underscore your concerns about privacy under Canada’s laws, the plan and CU fiduciary duties to members, and lobbying Flaherty to continue to hold out – that would be great. You can ask to speak to someone who deals with ‘compliance’ issues. An important point to make is that single citizenship Canadians are also affected – as per green card holders, snowbirds, etc. and as our joint account holders, and beneficiaries. If your joint account holder or adult beneficiaries is a single citizenship Canadian, they can call too. Making it clear that the effect goes beyond single individual account holders with US citizen designations. There is still more than a hint of the attitude in some quarters that this is of concern only to US citizens who happen to move up here – and so the thinking is that it is not of concern to substantial numbers of ‘Canadians’.
@badger
very good layout of all the points to make. Thanks!
As to your last point, I believe a substantial number of “Canadians” will begin to be concerned when they realize why their bank fees, service charges and so on, will be raised so their institution can pay for the costs it incurs in order to be in line with FATCAT.
@Everyone
The whole issue with credit unions and FATCA is still very much up in the air. I would say Credential Funds and CUMIS are the ones with a real problem more than individual credit unions such as Alterna. Alterna’s is a multiple billion dollar operation and their auditors are Price Waterhouse Coopers. I don’t think the would come out and just say they aren’t participating without some actual legal analysis of their position. I also think it given the lack of management cooridination(i.e. I don’t think Credential can force Alterna as an independent legal entity to comply) it is an open question to what extent Alterna and Credential/CUMIS are affiliated entities. The other issue is the requirement for all affiliated entities to comply doesn’t come into effect until 2016.
Here is an additional link below to some information on how credit unions along with Credential might be able to qualify for FATCA-lite status without having to provide information on “US Persons”.
http://www.deloitte.com/view/en_US/us/Services/tax/0ad7b445c5786310VgnVCM1000001956f00aRCRD.htm
@Everyone
Neither Alterna or Duca are “partner” credit unions of Credential. Wow. Alterna seems to really have their bases covered.
Credential “Partner” Credit Unions
http://www.credential.com/about_us/our_credit_union_partners.aspx
@ Tim,
My understanding of today was based upon reading that credit unions own the credit union centrals who own a portion of Credential. While Alterna may not be a “partner” credit union with Credential, there is still a legal financial tie via Credit Union 1.
I believe an earlier post I made (perhaps on the old Forum, I can’t remember anymore) was based upon an earlier “Policy and Advocacy Report” of CCU from June 2011. This is the info that produced uncertainty:
“It would appear at first glance that this new legislation would have little impact on most Canadian credit unions because, although they may have U.S. accountholders, credit unions do not ordinarily have U.S. source income to which the 30% withholding tax could be applied. However, discussions with Deloitte and others in the financial services industry suggest it is not that simple. There may be implications for the credit union system in at least a couple of areas:
(i) connected party rules may join credit unions and their affiliates, such as Credential, Ethical Funds and CUMIS, causing withholding tax issues for the affiliates if credit unions are not compliant; and
(ii) other FFIs may require credit unions to provide evidence of compliance with FATCA in order to transact business.”
Even if Alterna somehow is not connected to Credential, it may be that they fall victim to (ii).
Not trying to be argumentative, just seems that the issue of “connected party rules” needs more investigation. And even then, (ii) may seal their fate.