Is A Massive Drive to Dump Dollars Coming By July 1, 2014? With Clock Ticking On FATCA, Financial Firms Brace For Headaches

Forbes reports:

Long prized for their stability and secrecy, Swiss banks have built up a sort of folklore around discretion and tax avoidance. Effective this July, that reputation will meet its first real challenge when the Foreign Account Tax Compliance Act (FATCA) comes into effect.

The issue has reached a fever pitch as we get to within three months of the FATCA implementation date, with many financial firms saying they are still not certain on how they will handle FATCA compliance. A panel of financial compliance executives weighed the issue at the OpRisk North America conference in New York this past week, and, as Risk magazine reported, the logistical challenges are immense:

“’Multinational banks will include legal entities in many different jurisdictions, all with different reporting requirements under FATCA,’ pointed out Kevin Sullivan, head of North American tax operations for BNP Paribas .

Some fall under model 1 intergovernmental agreements (IGAs) in which national governments swap information with the U.S. on U.S. citizens in their countries and vice versa. Some fall under model 2, in which foreign institutions report directly to the U.S. Internal Revenue Service. Others will be in jurisdictions that as yet have no IGA in place, and will be forced to register as a foreign financial institution (FFI) under FATCA, or risk heavy withholding charges on payments from the U.S.”

Even financial institutions based in the U.S. will be subject to FATCA if they have clients in foreign jurisdictions.

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