However, the reality is we are past the point of whether Canadian financial institutions can choose to comply with FATCA or not. The U.S. government is not going to repeal FATCA and the Canadian government is negotiating an IGA with the U.S. According to public statements made by Finance Minister Jim Flaherty, the final IGA is coming soon, and once finalized, its requirements will be reflected in Canadian tax law. Canadian financial institutions will then be required to comply with whatever those requirements end up being under Canadian law.
We have made our concerns about FATCA known to the Canadian government, but it is now up to them to negotiate an IGA that will hopefully address your concerns and ours and balance out Canadian law and rights with the requirements of FATCA. We have no control over the negotiations or the content of the IGA and neither do the banks or other financial institutions.
To address some of @LynneBlaze's points raised here and on Twitter, the financial services industry has not capitulated and we are not enthusiastic about an IGA. Our concerns about FATCA have not changed but the reality is that an IGA is coming.
You have also asked if banks and other financial institutions will ask all customers where they were born and what would give them the legal authority to do so. The requirements are unclear right now but we are expecting the details to be outlined in the IGA.