8 thoughts on “Banks may charge US clients for US fines”

1. @SwissPinoy, are you trying to make me feel bad for my earlier recalcitrant post?

   In Canada, however, the banks have had to absorb the fine and give it back to the client after trying a maneuver like that. Tim mentioned it in one his comments.

2. @Petros, the post has nothing to do with anything that you said. I just found it to be recent enough, short enough and interesting enough to translate. Yet, there is much truth to what the a guy who works for CIBC said.

3. http://uniset.ca/other/cs6/68OR2d379.html

   In my view, there can be no question of unjust enrichment, at least at this stage, as there is no evidence that anything has been paid by the bank to the foreign state. [**12] Indeed, evidence of foreign law submitted by the respondent bank in the form of an affidavit to which is attached a letter of opinion from a New York attorney is far from conclusive as to the question of whether the United States courts will enforce the notices of levy served on the New York branch of the bank. The case cited in support of the proposition that United States courts do have jurisdiction refers to a case in which jurisdiction over a foreign branch was obtained by virtue of the fact that jurisdiction existed over the home office of that bank in New York. It seems to me far from obvious that jurisdiction over a branch in New York would give United States courts, in United States law, jurisdiction over a Canadian head office or Canadian branch.

   In any event, while acceptance by the bank of a penalty imposed in the United States might seem to be a hardship, the effect of permitting the Ontario branches to defend the applicants’ claim on the basis of the bank’s liability in New York State would be to enforce indirectly a claim for taxes by a foreign state and one that has, so far as the evidence discloses, not even given rise to a New York or Federal Court judgment.

4. It’s time for dual citizens to start thinking about ‘data discrimination.’ The practice of discriminating against one’s own citizens resident in their own country because they hold another nationality. How could this be fair?

   Another form of discrimination is foreign born US citizens are able to avoid detection because their passport shows a place of birth other than the US. They can avoid FATCA all together by lying.

   FATCA may be difficult to stop completely, but efforts to limit its scope may be an easier sell to a court, voters, or legislature. If a resident citizen avoids having their data passed out side of Canada, the EU, or other countries at least the status quo is kept. This includes sharing data between different tax authorities.

5. @Don

   There are a great many who will be able to fly under the radar due to being spared the mark of US birthplace. Undetected, they may continue to enjoy all the benefits of their fellow citizens. Along with creating two distinct classes of citizens, the US’s extraterritorial taxation laws and FATCA will also create two distinct classes of US persons within other countries. This is bound to cause tension within the group of US persons living abroad once FATCA begins claiming its victims. FATCA will fall short of its objective, to expose foreign bank accounts held by US persons, but perhaps it will be enough to appease the FATCA gods as is.

6. There will be 4 different types of American diaspora. The American underground, the unAmerican, the compliant American and the American Stasi.

7. bubblebustin, Don, SwissPinoy,

   My family will have a mix — three who have renounced US citizenship; one adult with a developmental disability who the US will not let me or any other parent, guardian, trustee renounce on his (or any other like him) behalf. Believe me, I would much rather have the ability to somehow cleanly have his supposed US citizenship removed and the whole family not having to put wasted energy into getting around the ‘fact’ of his extraneous US citizenship. He is, then, one who MAY be able to fly under the radar because he was born in Canada, never registered with the US, never lived in the US, never had any benefit from the US. He is ENTRAPPED into US citizenship (which my heart and my gut tells me is wrong — I believe “accidental americans” and especially these most vulnerable should have a choice and for those like my son a choice made for them — as parents, guardians and trustees do for other areas of their lives). He should, supposedly, file year after year after year for $0.00 that would be owed to the US. His US citizenship is anything but “precious” for our family — but that’s what the DOS officials maintain.

   I’ll prefer to think of my son and others like him as Underground Americans Abroad solely because of US entrapment. What an absurdity for everyone.

8. A source told me that one of the sticky points with the Swiss-US Programme (“FATCA looking back to 2008”) concerns pension fund money transferred by USPs working in Switzerland from their Swiss employer’s pension fund to a bank while they are in-between jobs or at the end of their career. The US interpretation (apparently from Kathryn Keneally’s group, Asst Attorney General, DOJ) is that these funds should be included for calculation of the 20% to 50% fines based on highest account balance, while the banks are arguing that they were simply the recipient of paid-out pension funds and shouldn’t have to pay the 20% to 50% fine for accepting pension payouts from regulated pension plans.

   For purposes of a calculation, a pension board member said that a typical end-of-career pension balance at his company was around CHF 500,000 (US$570,000). If the USG could grab 35% of pension funds of, say, 5,000 USPs who ended their career or changed jobs in Switzerland since 2008, this would be nearly US$1 billion in fines due to Swiss pension funds alone. With easy money like that, it is understandable why the DOJ/ Kathryn Keneally would not want to give in on this point.