The banking sector continues to be guarded in response to questions that have been raised by this newspaper about how local commercial banks propose to respond to a new United States law, which requires foreign banks and other agencies to provide the US Internal Revenue Service (IRS) with financial information pertaining to account holders and investors holding US citizenship.
However, in response to Stabroek Business most recent enquiry made at a banking and investment seminar earlier this week officials from two separate commercial banks dropped broad hints that the new US legislation is currently being contemplated by the banking sector under the auspices of its umbrella organization, the Guyana Association of Bankers.
Scotiabank Marketing Manager Jennifer Cipriani who chaired the Georgetown Chamber of Commerce and Industry (GCCI)-organized banking and investment forum declined to provide a direct answer to the question when it was raised again by the Stabroek Business at the Pegasus forum though she gave an undertaking that the Bankers Association would be providing an official response on the matter.
At the conclusion of her own presentation the seminar which laid out the requirements for accessing loans for commercial banks, Bankers Association representative Shaleeza Shaw said the commercial banking sector might require guidance from the central bank before a pronouncement is made on the Foreign Account Tax Compliance Act (FATCA); a piece of legislation which US tax officials have described as a “fiscal tourniquet” designed to put a squeeze on tax evasion.
Designed to stem the leaking of capital from the US through overseas bank accounts, FATCA, in effect, seeks to recruit foreign financial institutions as watchdogs for the IRS, tracking, recording and reporting the assets of US citizens, irrespective of location.
At last week’s GCCI forum, a banking official told Stabroek Business that one of the primary considerations that would be engaging the attention of the commercial banks would be the costs of complying with the provisions of FATCA through the official did say that “the banks would not be unmindful of the penalties spelt out in the legislation for failing to comply with the provisions of the Act”.
The source pointed out that some banking officials had already made the point that the economic burden of ensuring the effectiveness of “what is in effect a piece of US legislation” falls squarely on the shoulders of the foreign financial institutions “many of which cannot afford that burden”. By the same token, the new law is expected to position the US to recoup some US$8 billion in lost tax revenue.
At this week’s GCCI forum the Bankers’ Association representative hinted that local commercial banks, which now seem likely to adopt a collective position on the issue, might require more time to consider the issue.
