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Canadians Confront the Banks and the Yanks: Open Letter Urges President of Canadian Bankers Association to Oppose FATCA

By   Follow Me on Twitter     Message James Jatras     Permalink
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"[T]he 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."

 

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In view of those statements, we believe the following three points summarize the CBA's position on an IGA:

  1.  FATCA repeal is impossible:  The CBA claims that it as well as others in the financial services industry have exhausted all options to get rid of FATCA.  Therefore, compliance with FATCA is unavoidable.
  2. An IGA is inevitable:   Because of FATCA's inevitability, an IGA to impose FATCA on Canada is considered by the CBA to be the "least bad" option. The IGA is being negotiated between the Canadian Government and the U.S. Treasury Department, and also can be considered inevitable.
  3. An IGA is acceptable to Canadians:   The CBA considers an IGA to be the best option to protect Canadian citizens and residents ("balance out Canadian law and rights with the requirements of FATCA").

There is no foundation to any of these positions, as we outline below:

1. FATCA repeal is impossible:

It is not!

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The United States does not have a parliamentary system of government. "U.S. officials" at IRS and the Treasury Department (i.e., the Executive Branch) are mandated to implement and enforce legislation passed by Congress. They can't repeal it. Nonetheless, as the CBA stated:

"We also went to Washington to meet with IRS and U.S. Treasury officials and Canadian Embassy officials.  Last year, the CBA also made a presentation in Washington at public hearings before Treasury and the IRS."

Beseeching the "enforcers' of legislation is not the way you get changes from the "creators' of the legislation. Meetings with these officials are not just useless, they may be counter-productive. We understand representatives of the CBA have made limited efforts to convince some U.S. Senators and Congressmen of Canadian banks' concerns. U.S. legislators, unfortunately, care about their own constituents, not foreign banks' headaches (even if they are caused by a U.S. law).

A rejected Op-Ed is not an example of CBA due diligence. Submitting an op-ed piece to major U.S. publications is laudable, but rejection should not have stopped the effort. The CBA has the resources to run a full page ad and/or resubmit to Canadian Media sources. Why wasn't that done?

Despite CBA's claims, there has been no worldwide effort against FATCA. Instead of pretending to have tried to secure FATCA's repeal and failed, the CBA and its member banks should now direct funds to supporting a strategic and professional Washington-based effort.

FATCA's glaring weaknesses can be easily exposed through standard lobbying and public relations techniques. Perhaps begin with the questionable authority of the IGAs under U.S. law. (Even though they are signed by the State Department, they are not Treaties and will not be presented to the Senate for "advice and consent'.) Treasury delays and timeline failures for reaching a critical mass of IGAs signed add another weak point. IGAs are essential for FATCA to be a success from a U.S perspective. This provides opportunity for real pushback.

Then there is reciprocity -- FATCA's Achilles heel. It is the carrot they promise, but cannot deliver, given the political realities and opposition in Congress. Treasury will never be allowed to impose a domestic FATCA (DATCA) on all U.S. financial institutions (USFIs) to meet the reciprocity promises. You could exploit that very effectively, but you have done little.

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The CBA and its members have the resources to do far more. Rick Waugh, Chief Executive Officer of the Bank of Nova Scotia, recently revealed that his institution has spent nearly $100 million for FATCA compliance. ("Electronic spying "a big issue' for banks, Scotia CEO Waugh says," Financial Post, October 23, 2013).

Leaving aside the insoluble data vulnerability and information security problems banks are encountering (compounded by the ongoing scandal of  U.S. electronic spying which creates enormous loss of trust in U.S. assurances), FATCA creates massive costs that will be passed on by your member banks to ALL Canadian consumers.

CBA's members are pouring money into preparation for FATCA compliance, implementing procedures that are illegal under current Canadian law. You are pouring all your money into compliance solutions, sold to you by the FATCA Compliance Complex, (FCC) and nothing, as a hedge, on a serious lobby effort to undo this monster! We don't get it! Without some serious expenditure on the other side of the bet, you are placing all your eggs in one basket thus risking everything on one outcome.

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http://www.repealfatca.com

Jim Jatras is a former U.S. diplomat and foreign policy adviser to the U.S. Senate GOP leadership. He is pro-life, pro-gun, pro-traditional marriage, pro-immigration control, anti-war, pro-privacy, pro-tax reform, anti-phony 'free trade' deals. (more...)
 

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