The British Bankers Association
(BBA) said it has serious questions about the withholding and
passthru payment requirements proposed in the Foreign Account Tax
Compliance Act (FATCA).
The UK banking trade body also wants private
banking accounts below $1m exempt from the wide-reaching
regulation.
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A BBA submission to the US Treasury and
Internal Revenue Service (IRS) said that further research had
reaffirmed its initial concerns about the impact of the FATCA
passthru payment requirements on securities settlements and
inter-bank payment systems.
It said the measures would be difficult to
implement practically.
“The sheer magnitude of the potential impact
on such systems, as well as the other complexities and concerns,
raise very serious questions as to whether the present concept of
passthru payment can be practically implemented in a proportionate
or workable manner,” the BBA submission said.
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By GlobalDataAffluent portfolios
exempt?
The BBA also wants FATCA to distinguish
between private banking accounts with an aggregate value of $1m or
more and affluent investment accounts, so accounts with less than
$1m are exempt.
The submission said under certain business
models it is possible for an enhanced level of service, in
comparison to retail accounts, to be provided to some customers,
nominally involving a ‘relationship manager’ service, but where the
close relationship between a private banking customer and his
relationship manager does not exist.
Typically such customers would be portfolio
managed.
The BBA submission suggested that such
customer relationships should not fall within the intended scope of
the private banking proposals.
US regulators delay
FATCA implementation
US regulators are to delay the implementation
of FATCA until the beginning of 2014.
The US Treasury and the IRS unveiled plans to
gradually introduce the requirements of FATCA from the beginning of
2013.
A foreign financial institution must enter an
agreement with the IRS by 30 June 2013.
