Jun 2016 Financial News

T&T must be FATCA compliant by Sept 30

Jun 30, 2016

Bankers are frustrated over the long awaited passage and implementation of legislation for T&T to become FATCA (Foreign Account Tax Compliance Act) compliant.

The implications of non-compliance can result in T&T being unable to trade internationally. It can also result in a 30 per cent withholding tax implemented on US dollars flowing into the banking system in T&T from the US, bankers said yesterday.

“You may have US correspondent banks who may say since you are not FATCA compliant, I am not going to have a correspondent-banking relationship with you because you are not compliant with the dictates of the US government. It could impact correspondent banking relationships,” said Daryl White, president of the Banking Association of T&T.

The leaders of Scotiabank, RBC, JMMB bank and Republic Bank Ltd yesterday said they have been lobbying for more than two years for the legislation to be put in place but have not received any response.

The FATCA is a US-based law which came into effect in 2010. It was put in place to ensure that US citizens, including those living outside that country, file yearly tax returns. Extensions were given to become compliant and T&T must have everything in place to conform to the law by September 30, according to the banking leaders.

Frustrated after speaking to officials spanning two political administrations, the bankers spoke at a news conference yesterday, at RBC’s St Clair location. The news conference comes at a time when there are continuous complaints about the supply of US currency, and with the country experiencing an economic downturn.

Stating that T&T was at a critical stage when it comes to becoming compliant with FATCA, White said presently banks in T&T have to adhere to confidentiality clauses which means they can’t disclose any client information. If FACTA legislation is in place however, then information can be released to law enforcement entities requesting information.

The legislation has already been implemented in countries like Bahamas, Barbados, St Vincent and St Kitts and Nevis according to White. He said the bankers remain ready to cooperate with everyone to ensure FATCA compliance.

Nigel Baptiste, RBL managing director said the banks have received support from the relevant authorities and that they all understand why the legislation is necessary but “no action has taken place.”

“From a banking perspective, if this thing is not approved, if the agreement (the Model 1A Inter-Governmental Agreement) is not executed and the legislation is not put in place, the banks will have to go to individuals and ask for their approvals (to be compliant).”

He added that: “If the individual customers do not approve, we (the banks) are not going to go through the hassle of having to be withholding 30 per cent of the flows coming to them (the customers). We will close the relationships.”

In other words, a number of people would lose their banking relationships as well as the banks if this legislation is not in place, if the IGA agreement is not signed and the Board of Inland Revenue does not have a system in place to collect data.

Source:
Nadaleen Singh
Trinidad Guardian
Thursday June 30, 2016

http://www.guardian.co.tt/business/2016-06-30/tt-must-be-fatca-compliant-sept-30