RefugeeFromAmerica was in contact with BMO’s President’s Office about BMO’s FATCA policies and also with the CRA Commissioner’s Office and has sent in the following report.
In response to the CBC story about the vast number of bank accounts reported to the CRA/IRS, I thought I’d share an experience we had at a BMO branch back in August. In particular, I wanted to provide a data point to corroborate the suspicion that at least some Canadian financial institutions are not observing FATCA reporting minima and that, at least at the local level, they are violating Canadian law by not readily providing information to customers about FATCA reporting. Quoted below is a previously composed account of what transpired during our branch visit [and the events that followed it]
“…our entire family had an appointment at the main BMO branch in our home city in the Maritimes today to take our CLNs in to verify that all US indicia were still absent from my and my wife’s accounts (since we had previously done this shortly after renouncing in 20XX) and to have all US indicia scrubbed from our daughter’s banking information now that she is also no longer a US citizen. The bank staff seemed puzzled at first at our request but gladly complied after some explanation about CBT/FATCA and our renunciations. The interesting part began after that step when I asked how I might go about obtaining a written report from BMO detailing what, if any, of our family’s banking information had ever been shared with the CRA, under FATCA, for transmittal to the IRS. The customer service agent had no idea what to do and consulted his manager, who also had no idea what to do. So, the agent called someone at the BMO corporate office to inquire and, when fully revealing to that person what we were asking for, had the person on the phone turn extremely hostile to them. They told the branch agent that there was no way for BMO to obtain or report this information to any customers and that they would not give us any contact information for anyone at BMO who could help, not even legal department staff. At the end of the call, the branch agent told us that they were very rattled by how hostile the corporate person was to them about this topic and that they had never experienced this kind of behaviour before. After conferring with the branch manager for a long while after this phone call, they both came back to the office to talk to us. The manager told us that they would look into this situation and get back to us as soon as possible with some answers. The most shocking revelation came from what the manager said just before we left. She indicated that she personally was responsible for forwarding local accountholder information to the CRA for FATCA compliance purposes and that she forwarded information for ALL accounts having any US indicia! Upon questioning, she clearly stated that there were no minimum balance thresholds being observed and that any account having US indicia got reported. I know there has been lots of discussion over the years after FATCA came into effect about whether banks would follow the minimum reporting guidelines in the law or just report everyone to be on the safe side. Well, at least at this branch (and likely company wide), it appears that BMO is reporting everyone.”The branch manager never followed up with us as she promised to do, so we filed formal demand letters with both the BMO president’s office and the CRA in an attempt to force them to hand over any and all information about FATCA transfers of our financial information. We received a letter from the CRA Commissioner’s Office indicating that we would receive more information from the CRA about this at a later date and I have been in contact with a complaint resolution officer at BMO who has been working with me to get the information we are demanding. One interesting tidbit from BMO was that our daughter was, indeed, flagged for FATCA reporting with US indicia, even though the local branch agent said she was not. A form RC518 had to be formally filed with BMO to clear the FATCA reporting flag from her accounts. We are still waiting for the final report from them about what got reported previously.So, the bottom line is that it looks like BMO is likely reporting everyone, regardless of account balances, and at least some BMO staff/managers do not know anything about how to clear US indicia or about their legal obligations to provide information to customers about what BMO has reported to the CRA, and ultimately to the IRS, about them. I think it would behoove all renunciants and other concerned parties to follow up officially with the CRA and their bank’s corporate office to confirm if they are flagged for reporting and what information, if any, has been previously sent. Even if you have renounced and notified your bank, you may still have your information reported indefinitely, unless you make a formal inquiry. You simply cannot take a branch agent’s or manager’s word for being in the clear.
@Harmon
I think you might be mixing up FBAR and FATCA thresholds.
The $10k threshold for FBAR reporting (aggregate high balance of all accounts during the year) applies equally to US residents and non-residents.
There is also a FATCA form (8938) submitted by the US taxpayer. For this one there are different filing thresholds for residents and non-residents, but in all cases much higher thresholds than FBAR. See details here: https://ayarlaw.com/fbar-filing-threshold/
And of course there is FATCA reporting by banks. The threshold above with a bank is *required* to report accounts may vary, but for Canada and most other countries I believe it is $50k. There is unfortunately nothing to prevent banks from reporting accounts under that threshold, but we don’t yet have enough information to determine how widespread this practice has become.
@Harmon
The FBAR threshold is US$10,000 aggregate regardless of where the filer lives. Once the threshold has been reached, all accounts must be reported no matter how small the balance is.
50K is the threshold for Form 8938 if you are a US resident. The Form 8938 threshold is greater (200K) for filers who live outside the US.
50K is the threshold for Form 8938 if you are a US residents.
Glad to see we are right on top of things, although it would appear I need to proofread before I hit the “post comment” button.
Important follow up to my original post:
BMO confirmed to me today on the phone, with a signed paper copy of the same statement on their letterhead to follow, that none of our family’s financial information has ever been reported by them to the CRA for transmittal to the IRS under the FATCA IGA. Now, we are just waiting for the CRA’s response to see if they corroborate that statement from BMO.
I strongly recommend for anyone interested in whether their stuff has been reported to the IRS to force their financial institution and the CRA to provide records of such transfers in writing. It is a requirement under the law that they provide this information upon request and we should all make them do it. Flood them with requests…
…and the plot thickens…
We received written responses from the CRA yesterday confirming that BMO had indeed never reported any information for me and my wife but they did report my daughter’s savings account in April of this year for the 2018 tax year, even though their corporate-level legal/tax experts claimed they had not. Also, the maximum balance for this account has never been more than $2K for its entire existence going back many years.
So, BMO reported an account with a trivial balance that had never been previously reported and then was preparing to certify to us writing that none of this had ever occurred. I have been back in touch with them today and they are scrambling to figure it all out…
FATCA and how the Canadian banks are handling it is a shitshow. You should never trust what your local branch tells you about FATCA and, it appears, you can’t even trust the highest levels of the financial institution itself to be able to competently tell you either. Only the CRA really knows for sure. Everyone who cares should definitely flood them all with written requests for the answers or you may unknowingly have your information reported to the Americans in perpetuity, even when you have been assured by them, possibly even in writing, that they have/will not.
Let the press know.
Many on this very forum made fun of others who suggested that this would likely happen. I’d bet that there are many more who would be shocked to learn that such is possible.
Perhaps, some will be spurred into action.
Well, its good to hear that the IRS has finally been informed about your tax cheating daughter’s sub $2000 savings account. At current interest rates, the account could rack up as much as $25 in unreported interest per year so its absolutely vital the US takes immediate action to stop this existential threat to their global dominance.
No way FATCA is a shitshow. On the contrary, FATCA is working exactly as intended and will rake in billions by allowing the IRS to finally tax the vast wealth hidden in the sophisticated tax avoidance structures known as children’s savings accounts. I have to give you grudging credit for discovering this clever “in plain sight” tax evasion scheme, but as of right now, the jigs up. If the IRS had known about this they would’ve never allowed your daughter to even open this passive foreign-controlled BMO savings account, let alone deposit money in it.
Has she decided whether she is going to file via the Streamlined Procedure or is she just going to do a “quiet” disclosure? I sure hope the fines and penalties aren’t too high. Its tough when a kid has to give up their lunch money but, on the other hand, everyone needs to pay their fair share.
@JapanT
I have definitely thought about going to the press, but I hesitate because we have potentially dangerous/violent hyper-patriotic relatives in the States who do not know about the renunciations. This could potentially reveal that and cause serious issues for us.
@maz57
Great post! Love it! 😉
All the more reason for those in Canada (and possibly other countries with loose enforcement) to ensure that they never disclose US person status to their banks. For those with US indicia on file, such as a mailing address or phone number dating back to a time spent living in the US, it would perhaps be wise to close the accounts and make a clean start with another bank. Even if some data leaked, there’s no reason to let it continue.
@refugee
Do tell. You can’t leave us hanging!
@refugee
Boy, that sure doesn’t make it easy. Could you speak to a reporter without them revealing your name?
@refugee
I’m curious. Does your daughter have a SSN and, if so, does BMO know about it? Its none of my business so I won’t be offended if you’d rather not answer the question.
I’m lucky. My US relatives know all about CBT and FATCA and find it totally appalling but, of course, there is absolutely nothing they can do about it. They also know that’s why I relinquished my US citizenship and are quite sympathetic. They all tell me they would do the same if they were in my position.
As a former USC who has been through the relinquishment rigamarole, I find it reprehensible that any ex-US-person should slip through the reporting cracks and have their data handed over to the IRS. It is no small feat to obtain a new, second citizenship and it is even more costly to rid onesself of US personhood. It is apalling that after all the expense, trials and tribulations faced to break free of FATCA oppression, a FFI or revenue agency can still mislabel someone as a US account holder and report the data indiscriminately. It’s disgusting and anyone who experiences this should be duly compensated for the error of having their personal financial data mistakenly shared with a foreign government agency!
In my personal situation, my ‘unambiguously indicated’ US place of birth on my EU passport (and driver’s license, etc.) will continually put my data at risk of being transferred because the FFI’s prefer covering their asses to knowing their customers.
Several months ago I opened my first basic online bank account (since relinquishing) with a German bank. I used my new Austrian passport to apply and I was asked to list all my tax residencies and corresponding tax ID numbers. Of course, I only listed my Austrian info. According to the IGAs for both Austria and Germany, however, in the event that a US birthplace is ‘unambiguously indicated’, the bank is supposed to obtain and maintain a record of:
1) self-certification of non-US citizen status/tax residency (e.g. on a W-8)
2) the non-US passport ‘evidencing the account holder’s citizenship or nationality in a country other than the US, and
3) a copy of the account holder’s CLN’ or, alternatively, a statement explaining a lack of CLN or failure to obtain US citizenship at birth.
Supposedly, these requirements need only be enforced with accounts exceeding $50K, but we all know how that has been working out. So far I haven’t been asked by the German bank for a W-8, CLN or self-certification of non-US status, so maybe they’re adhering to the $50K threshold – or maybe they are just going to report my little account no matter what. Who knows?
At any rate, I find it nerve-wracking to still be in a perpetual state of concern about how I am being identified, defined, categorized and reported on based on ‘indicia’ I have no control over (i.e. birthplace), but paid dearly to escape from. All the time, effort, and money – not to mention language and citizenship testing – just to be in a different, slightly less discrimatory position is joke – a really bad joke – and it makes me angry to think my financial life will be carried out under this cloud from now on. So much for a fresh start….
@Petlover
Sadly, your situation is exactly as I and others warned about. It is also a factor in my decision to not attempt the impossible (for someone situated as I) to obtain citizenship in the country I am a permanent resident of, Japan. Going through the hell of gaining a new citizenship and “earning” and paying for a CLN does guarantee one is completely free from the US.
While I can not feel as you do, I can only imagine how angry I would be if I were in your situation. And Damned angry I would be.
@ Petlover
My husband has an unambiguous birthplace and been through the renunciation rigamarole too. May I save your comment for him to use as a partial outline in the event he might need to express to bank and/or MP his anger about the uncertainty of what is being done with his data? At this point there are no alarms going off but we all know that when stealth and deception are a modis operandi there are no alarms.
@JapanT
Yes, we are still considering contacting the press anyway to see if we can be anonymous in reporting this situation.
@maz57
No, BMO does not have my daughter’s SSN. We would have never given that to them for her or us for any reason…We’d close all our account and keep our money in a Mason jar first!
@Petlover
I know well the anxiety you describe. It’s what has motivated us to pursue this path and make BMO and the CRA cough up information about what they’ve sent and to make them feel the heat (what little we can apply) for what they’ve done.
@EmBee
Of course, you are welcome to save my comment and make use of it 😉
@JapanT and @refugeefromamerica
Yes, this data transferring is despicable. Personally, relinquishment was a great relief for me and opened the doors to all kinds of financial products which were previously unavailable to me or unwise to use, but it definitely wasn’t a panacea for ALL the anxiety…. unfortunately.
@refugee
With no SSN at least you can take some comfort in the fact that the info transmitted to the IRS is absolutely useless to them In fact, all it really does is clog their system with more garbage data. That doesn’t make the situation any less aggravating, though.
I will make another Access to Information request to CRA, to expand my original questions about the numbers of individuals account-holders versus the number of accounts, and the number of accounts associated with Canadian versus US addresses, to include the 2018 data. More importantly, I will now ask for the number of accounts included among those reported to the IRS that either (i) have year-end balances under the minimum reporting threshold of $50,000 or (ii) are registered accounts (RRSP, TFSA etc.) not required to be reported under the terms of the IGA.
Of interest, the initial response to the original request earlier this year indicated that to date, fewer than 20 people have asked CRA if their financial data had been reported under FATCA.
So much easier here in Japan. No need for a FOI request. All data of anyone and everyone who has spent over the time limit in the States has been reported since 2014, regardless of citizenship.
@Citizen
Wow, fewer than 20 people?!?! I guess we’re in a very exclusive club, then! 😉 I’d gladly not be a member of that club any longer…
Seriously, though, people who think they’re off the FATCA reporting hook may not actually be at all. Everyone concerned should make their bank and the CRA do their jobs and tell them whether they are flagged as reportable and whether anything has ever been sent, those flying under the radar exempt, of course.
I’d bet that there are not many more than that number who know and fewer that care. I’d bet that the number who know is a small fraction of one percent of those who are affected.
My hope is that if CRA can produce some numbers, we’ll have a sense of how many individuals resident in Canada will have had accounts reported. I’m going to make a wild guess and assume that out of the 900k accounts reported this past year, we’re looking at 50-100k individuals in Canada; unfortunately we won’t be able to say anything about citizenship (US only, Canadian only, or dual) because that data is not transmitted to CRA.
Based on the progress thus far, it will be a slow process trying to tease out information about accounts under the reporting threshold, or registered accounts supposedly excluded from reporting. That will, I hope, be of much greater interest to the press.
To reinforce my estimate of the number of individuals impacted by FATCA reporting, in 2011, the last year for which IRS data is available, there were 45k US tax returns filed from Canada. The breakdown of foreign tax filings is released on a 4-year cycle, hopefully we will have the post-FATCA 2015 figures soon.
Interesting. There are supposed to be a million Americans in Canada. 1 in 20 files US taxes.
Sounds about right. (For 2011 the total returns filed from outside the US was around half a million, so compliance rate below 10 percent.) I imagine a fair chunk of those who do file would be expats with ties to the US who might plan to return or are otherwise entangled.
Why else would someone file? No reason to.
Those numbers are 8 years old but I don’t think there will be a huge increase. Moodys and that lot of have probably scared a few thousand here or there, but not tens of thousands.