Caribbean commercial banks could adopt a more assertive policy in relation to the new United States Foreign Account Tax Compliance Act (FATCA), which is scheduled to come on stream next year.
A senior local commercial banking official has told Stabroek Business that Caribbean banks may adopt a regional political lobby to modify some of the clauses embodied in the legislation.
The local banking sector has not divulged any position that commercial banks are likely to take on FATCA, the objective of which is to allow the US Government, through its Internal Revenue Service (IRS) to identify persons with American residency status, who seek to avoid the payment of taxes by holding accounts in offshore financial institutions, including those in Guyana and the rest of the Caribbean. Stabroek Business has so far been unable to determine whether the commitment given at a small business banking seminar held earlier this year that the Guyana Bankers’ Association will pronounce on the matter will be kept any time soon.
However, the local commercial bank manager who agreed to speak with Stabroek Business on condition of anonymity said, “quite a bit more activity on FATCA has been taking place elsewhere in the Caribbean” where banks are reportedly preparing to engage governments in preparation for a possible regional demarche on Washington to discuss the matter.
The local banking official said Guyana was likely to be represented at this month’s meeting of the Caribbean Bankers Association (CBA) where FATCA will be on the agenda. The CBA has long gone on record as saying that it is concerned about the likely implications of the FATCA for regional financial services institutions, corporations, individuals and the industry as a whole. However, the local banking official told Stabroek Business that while the CBA has been “making noises” about FATCA there have been no corresponding initiatives “either here in Guyana or very much elsewhere in the region with the arguable exception of Jamaica.”
The official was “not particularly surprised that local commercial banks have been lying low on the matter” since “there will have to be some measure of consultation between and among the institutions; not only the banks but the other financial institutions as well.”
Asked to comment on the some of the likely implications of the FATCA for local and regional commercial banks the banking official told Stabroek Business that it was both “a question of the operational and logistical implications of having to make what might well be a significant amount of information to the US authorities as well as the sensitivities associated with the handing over of that information from the standpoint of the account holders.
“I expect that there will come a point in time when decisions are going to have to be made and I expect that some people will probably be less happy than others since it [is] likely that some account holders will not want their private banking details to get into the hands of the US authorities.”
