A local commercial bank official has told Stabroek Business that the compliance of banks and other financial institutions in Guyana and other developing countries with the provisions of the United States’ Foreign Account Tax Compliance Act (FATCA) was “entirely unsurprising” and that “nothing different” could have been expected of the Guyana banking community.
“If you set aside the virtues or otherwise of the US legislation, it has to be said that the law itself illustrates the unevenness of the leverage which different countries possess in the international system,” the banker said.
The source said it was always expected that the commercial banks would meet and discuss the legislation “but if you read the legislation carefully and see the extent of the sanctions that could attend non-compliance then you are bound to understand the pressures which financial institutions were under to sign on to FATCA.
Last Friday, Stabroek Business reported exclusively on Republic Bank’s announcement of its compliance with FATCA. In a statement, the bank said that its compliance with the provisions of the Act which came into force on Monday took full account of the importance of doing business with the US.
In its statement Republic Bank said the United States had been able to persuade territories and financial institutions to enter into agreements with that country to disclose certain information by stipulating a 30% withholding tax on certain payments coming from the US to non-compliant financial institutions.
“Whichever way you look at it, the request for compliance carries with it a straightforward and unambiguous threat of reprisal for non-compliance,” the banking source said.
Republic Bank puts it differently. In its release, it talks about banks being challenged to remain viable in the event of non-compliance. Republic Bank had also said that it would begin to communicate with its customers, changes in service procedures resulting from the implementation of FATCA.
The banking source told Stabroek Business that customers, who are citizens or residents of the US can anticipate “some changed procedures” when dealing with commercial banks. “From the standpoint of customer service, banks will also be concerned about adding more procedures to what in some instances is already a tedious process. Of course there are bound to be instances in which banks will be batting on a bad wicket. Banks have always been seen as repositories of important secrets and FATCA overturns this since what the law has done is to compel commercial banks to share information which their customers might not wish to share,” the banker said.
