ABA will not negotiate bank secrecy law FATCA

Lopez Valdes clarifies that only information given by state bodies

The implications of the Law Enforcement Tax Accounts Abroad (FATCA for its acronym in English) adopted by the United States in March 2010, has generated unrest globally, because that nation imposes conditionalities that violate laws local.

That legislation provides, among other things, that through direct agreements with banks of other nations, the US tax authority entitled to access financial information from all US citizens or residents who have such entities out of the American nation.

If financial institutions refuse, then the United States reserves the right to retain up to 30% of all transactions conducted in US territory, which translates into a compelling condition, since almost the entire world does business direct or indirect with the United States.

President of the Association of Commercial Banks of the Dominican Republic (ABA), Jose Manuel Lopez Valdes said that FATCA is a US law to apply in the United States and said that the only way to meet these requirements is through a agreement to exchange tax information between states between China and the United States.

That agreement exists since the 80s, so it is now necessary to develop new agreements on a reciprocal basis, so that the requirements of the US can also be required by the other State, in this case Dominican Republic.

Lopez Valdes said there banking secrecy in the country and that this constraint will not be negotiated to satisfy a requirement of the United States.

“It has drafted an agreement made for the Dominican law enforcement and not Dominican law violates or is modified, it is not necessary to modify it because the Americans want to change it,” said the president of the ABA.

For that reason, the draft agreement of reciprocity, have established a number of conditions, among which is that banks do not make direct agreements with the tax authority of the United States, but will from state to state, so the required information will be processed through the Superintendency of Banks of Dominican Republic and the Ministry of Finance.

In addition, banks will not act as withholding agents of American authority but only limited to reporting on the statement of the citizens of that nation.

Thus, the domestic financial sector maintains its independence and confidentiality of customer data, while the state agency can obtain the same information from the United States on the financial statements of Dominican citizens there.

“The deal is done exempts banks hold, nothing will inform, exchange of information when the agreement is concluded,” said the president of the ABA. “There are over a hundred States by such agreements and we are in the queue, so it is not right that will do that,” he said.

Cost of adaptation

While the tax authorities in the United States and Dominican Republic working on translations of agreements to comply with FATCA, commercial banks develop the appropriate adjustments to have ready the information may be required.

So they have added in their database the request for information on nationality and residence customers who open accounts and apply for other services, thus having a lifting of which are American.

“The problem is that it costs more for investigating financial system who are US citizens and what income it will generate are,” said Lopez Valdes.

He said US authorities estimate that the implementation of the FATCA law could obtain revenues of approximately US $ 8,000 million, while banks, globally, the process of gathering the data costs them around US $ 10,000 million.

Provisions of FATCA

The FATCA establishes a basis for providing information which come first accounts of more than $ 1 million, then a few years down to $ 250,000 and then placed to a maximum of US $ 50,000. Of this amount down is not reported.

In addition to tax and financial information of residents or American citizens in that country, Tax Compliance Act also states that the US tax authority will be offered information about domestic and foreign enterprises with more than 10% equity brought by citizens of that nation.