Inconsistent Handling of New Accounts Under FATCA Pacts Raises Concern

March 27 — Competent authorities should step in to resolve potential disagreements between the U.S. and other jurisdictions on how to treat new accounts under the Foreign Account Tax Compliance Act, the Securities Industry and Financial Markets Association said.

In a letter to the Treasury Department released March 27, SIFMA said the U.S. appears to require that under intergovernmental agreements, banks must refuse to open or close new accounts if they can’t get self-certifications from the account holders.

Conversely, the group said, the governments of both the U.K. and Canada have taken the position under their IGAs that financial institutions can open these accounts and don’t have to close them as long as the accounts are treated as reportable.