0

Gov't Fatca Deal Could 'Severely Compromise' The Financial Sector

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A leading QC has urged the Government not to sign any agreement relating to the US Foreign Account Tax Compliance Act (FATCA) that involves automatic information exchange, warning that doing so would “severely compromise” the Bahamian financial services industry.

photo

Brian Moree

Brian Moree, senior partner at McKinney, Bancroft & Hughes, told Tribune Business he “strongly opposed” including any requirements for the automatic exchange of information in the Intergovernmental Agreements (IDAs) that the US is offering as an alternative FATCA compliance route.

Warning that this was a potential “slippery slope” for the financial services industry, Mr Moree said it would be “naive” to believe the Bahamas could resist demands for the automatic exchange of tax information from other G-20/OECD countries if it signed up to such a regime with the US.

Through signing an IGA with the US Treasury/Internal Revenue Service (IRS), a country would enable its financial services providers to provide the information on US account holders that Washington is seeking to its own government agencies, such as a tax authority, who would then pass on the details using their existing Tax Information Exchange Agreement (TIEA) with the US.

This approach is being promoted as a way to reduce the time and costs associated with FATCA compliance for individual financial institutions, as well as helping them to comply with home jurisdiction laws.

Tribune Business understands that the Christie administration, chiefly Ryan Pinder, minister of financial services, is currently determining whether the Bahamas should sign an IGA with the US, or go the route where individual providers sign foreign financial institutions (FFI) agreements with the IRS to make themselves FATCA compliant.

Mr Moree, though, warned against the Bahamas trading the automatic exchange of information for an IGA regime that was “more cost efficient” for its individual institutions, arguing that to do so would eliminate legitimate clients’ rights to confidentiality and be “extremely detrimental” to the financial services industry’s future.

“I would be strongly opposed to including in an IGA a provision which calls for the automatic exchange of information,” the QC told Tribune Business.

“In my view, it would be a slippery slope where we would be required in very short order to provide a similar regime to all the OECD and G-20 countries.

“It would be, in my view, naive to think that we would enter into an arrangement that includes an automatic exchange of information with the US government and maintain our resistance to a similar regime with the OECD and other international agencies dealing with this matter.

“A critically important policy decision has to be made as to whether we want to move to automatic exchange of information,” Mr Moree further explained.

“My own view is that would be extremely detrimental to the country, and while I appreciate the IGA is designed to make FATCA a more cost effective and standard regime, which could be beneficial to individual financial institutions in our country, we have to be very careful about trading that benefit for a move to automatic exchange of information.

“That would be extremely detrimental to the financial services industry in the Bahamas. I would strongly warn the Government about entering into any arrangement, whether an IGA or not, that took us to the automatic exchange of information.”

Mr Moree told Tribune Business that the current TIEA regime, where the Bahamas passed information upon request - and “in clearly defined circumstances” - was “well designed” and allowed foreign law enforcement and tax agencies to obtain details relating to their legitimate investigations.

He added that the bar, or threshold, they had to meet to receive the Bahamas’ co-operation and assistance was already “very low”, ensuring this nation was already playing a full part in combating cross-border financial crimes such as fraud, money laundering or tax evasion.

“To take that one step further and enter into a regime requiring the automatic exchange of information across the board would severely compromise the future of our financial industry, particularly on the private client and wealth management side,” Mr Moree told Tribune Business.

“The only arrangement that could work is if every other similar competitor to ourselves had the same regime, which they don’t.

“Otherwise, it makes the Bahamas less competitive on the disclosure of information, even though it could be argued that it makes it easier and less costly for companies to comply if it’s addressed at the IGA level.”

Explaining why the automatic exchange of information would be harmful to the Bahamian financial services sector, Mr Moree said: “The international financial services industry still places a premium on privacy.

“While no one today would suggest countries should be involved in hiding illegal activity and acting as a sanctuary for dirty money, to make it an Open Sesame where there is no suggestion of wrongdoing or investigation pending, and no suggestion anyone is breaking their domestic laws, getting to automatic exchange of information is going to compromise our business relating to high net worth individuals.

“These people are perfectly responsible, law abiding citizens who’ve earned their money legitimately, but want to have a reasonable degree of privacy so their affairs are not made public to anyone they are not supposed to.”

Mr Moree told Tribune Business that the only “reasonable alternative” where the Bahamas was concerned was an IGA that did not require the automatic exchange of tax information.

“The idea of trying to allow compliance at the jurisdiction level, as opposed to the institution level, makes perfect sense but not at the expense of the jurisdiction,” he added.

Comments

karina 3 years, 9 months ago

They should not take any kind of decision which might negatively impact the financial industry. However, now you can find financial institutes online, for instance, if you need a http://www.globalcheckrecovery.com/le...">NSF check collection company, you can find it online.

0

Sign in to comment