UPDATE: The original article was mysteriously removed today so the link above no longer works. George, however, located a copy via Google Cache and it is available here for now. A .pdf text version is also available here.
UPDATE #2 – mystery of the disappearance of original article solved — “there was a problem”. Lucky for us — George found a copy via Google Cache (see above):
From: Katherine Burger
Sent: Friday, July 18, 2014 8:36 AM
Subject: RE: Article July 16, 2014
Dear Carol – thank you for the note and feedback. However, the article no longer is available – there was a problem and we had to pull it from the site. However, Fred Cook is one of our regular contributors so hopefully there will be new content from him soon.
Insurance & Technology
Bank Systems & Technology
O: 212-600-3062 I E: email@example.com
Sent: Wednesday, July 16, 2014 6:35 PM
To: Katherine Burger
Subject: Article July 16, 2014
Information Week’s Bank Systems and Technology journal had online briefly this morning a very good, very honest article on the Foreign Bank Account Tax Compliance Act (FATCA) by Fred Cook. The title was:
“Hey, Regulators: How About More Carrot & Less Stick?”
Can I get a copy of that article or can you let me know how I can get in contact with the author, Fred Cook?
Thanks very much for your assistance in obtaining a copy of the above article.
Calgary, AB, Canada
Looks like the financial industry is finally realizing that FATCA is no one night stand but rather a shotgun wedding from hell – and the honeymoon is over.
We hear a lot about how the FATCA compliance industry is gleefully raking-in wheelbarrows full of consulting fees to design and commission new data management systems for banks and other financial institutions, but rarely have we heard from those on the inside who have to manage a growing plethora of complex and costly compliance programs. A scant couple of weeks after FATCA’s inauguration, there are already signs of “FATCA fatigue” setting-in and, perhaps, a belated realization that something is just not ethically or legally right about FATCA.
Here are excerpts from an article by Fred Cook in Information Week’s Bank Systems and Technology journal:
Hey, Regulators: How About More Carrot & Less Stick?
For banks to afford the resources needed to handle today’s regulatory demands, it may be time to discuss changes in compliance enforcement with the regulators.
I do appreciate the need to provide information related to potential criminal activity for the benefit of society at large, but the recent Foreign Account Tax Compliance Act (FATCA) still has me shaking my head. This new regulation requires institutions to report taxable information on US citizens (living in Canada) via the Canadian Revenue Agency (CRA) to the US government. This means that, when we open accounts in Canada, we’re now required to collect customers’ citizenship details. We also have to ascertain the citizenship of all our current clients, even though citizenship is not a requirement for opening or servicing a financial account. We are also required to report, through the CRA, details of any US citizen living in Canada with account balances of more [than] $50,000. Ironically, until now asking for personal information such as citizenship was in direct violation of Canada’s privacy laws.
How is implementing the overhead of FATCA regulations a benefit to the institution’s business? Is it not just doing the US Internal Revenue Service’s work for it? I would make the same case for tracking deposits larger than $10,000, reporting suspicious transactions, or determining politically exposed people and providing details about them to government and police agencies — for free. Though managing these “offloading” regulatory requirements doesn’t have any direct benefit to managing the bank’s core business, they must be followed to stay in business under threat of substantial fines and criminal charges.
These government and policing agencies have zeroed in on the fact that banking is a necessity, and that the institutions providing these banking services have access to very personal information otherwise not readily available on consumers and their monetary habits. Therefore, my expectation is that our regulations will continue to expand while new ones are added.
Fred Cook is listed in the article as Chief Information Officer of Blueshore Financial. (Formerly North Shore Credit Union in North Vancouver BC. He is also a director of FICANEX , which operates The Exchange Network, the largest multi-institution full-service ATM network in Canada.
JC Actually, nothing bad happens unless you have US assets or investments.
If you are recalcitrant, presumably you might get a nasty letter from an IRS computer- so what?
Also, say you own apple or other US shares. Presumably they would withhold 30% of any dividend owing to you although lord knows how they are supposed to know. CRA tells IRS tells all dividend paying members of the US stock universe??? the mind boggles. it’s not clear to me where the 30% sanction is applied- is it to the institution or the individual? Your guess is as good as mine. They certainly can’t just seize 30% of your Canadian accounts.
We have to remind ourselves that we were never the intended target. This just grew completely out of control.
JC From the IGA. Page 14.
2. Suspension of Rules Relating to Recalcitrant Accounts. The United States shall not require a Reporting Canadian Financial Institution to withhold tax under section 1471 or 1472 of the U.S. Internal Revenue Code with respect to an account held by a recalcitrant account holder (as defined in section 1471(d)(6) of the U.S. Internal Revenue Code), or to close such account, if the U.S. Competent Authority receives the information set forth in subparagraph 2(a) of Article 2 of this Agreement, subject to the provisions of Article 3 of this Agreement, with respect to such account
Well Dash, everything comes down to risk analysis when dealing with the USG. It you want to assume it is not happening then that’s your choice. Assume the worst and if it doesn’t happen then no real loss.
Yes, ALWAYS assume the worse then you won’t be disappointed. Once you are in their clutches (that’s they have your data) all bets are off.
If you want to understand the 30% withholding and how it migt apply to someone who has not been “cured” of US indicia this GATCA podcast might help you understand the financial institution’ s challenge in the “Conversion” of ALL their customers to FATCA compliance. (Don’t you love the disease and religious terminology?) EVERYONE has to sign US forms declaring themselves as NOT U.S. Persons, because you are until you declare you are not!
This represents the understanding of how the regulations work by a Compliance Expert. You will NOT like the message, but, IMHO, it provides some valuable and interesting insights.
LOL. Sounds like “the dog ate my homework” or the Lois Lerner thing “I have lost the emails from the critical period as my PC disk crashed … along with about 20 others in the IRS and other US Government agencies around the same time”.
@newborn. Will this thing help with the diarrhea from the IRS?