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WMA: US could make examples of UK firms as Fatca looms
by Elsa Buchanan on Mar 26, 2014 at 13:39
The Wealth Management Association (WMA) has warned UK firms could be made an example of by the US government under the Foreign Accounting and Tax Compliance Act (Fatca), in the same way Swiss banks have been in recent years.
‘It’s a sledgehammer to try and hit small problems. Yet the fact is that at some stage, I am sure like the Swiss clients, the US government will try and find someone to make an example of quickly,’ Dr Tim May, chief executive officer, explained at WMA event.
By 25 April, all UK financial institutions with custody of clients’ assets must register for a Global Intermediary Identification Number (GIIN) to ensure they appear on the first list published by the Internal Revenue Service (IRS) on 2 June.‘And it is not only at company level, but for individuals too: if someone travels to the US, and they are from a firm that is under some sort of spotlight, and happen to be the FATCA reporting officer, they may well get held in the US. You just don’t know, as it has happened before.
‘It’s a fear aspect that I’m sure a lot of our members may never come across but somewhere, someone in the market is going to be caught, and it will be made very public.’
May pointed to the case of Wegelin, the oldest Swiss private bank, which was forced to close following its admission to tax law violations in the US in January last year. At the time, it had agreed to pay $57.8 million in fines. In fact, a crackdown by the IRS facilitated the arrests of Swiss bankers and the prosecution of banks for aiding billions of dollars of tax evasion by American citizens.
Andy Thompson, director of operations, said UK firms could mistakenly feel they will not be targeted under the new rules, due to a minimal number of clients with US ties.
‘It’s very much a sledgehammer to crack a nut here, because as far as the vast majority of UK institutions are concerned, there are going to have very few reportable accounts.’
However, the problem is they still have to undertake checks of their account holders to ascertain whether they do have anything to report.
There is no requirement under Fatca for an external audit of the likes of Deloitte or KPMG to undertake a proper compliance check, but UK firms will have to designate a ‘responsible officer’, Thompson explained.
‘Basically, someone has to put its hand up, and if the US and by extension the UK have any reason to suspect non-compliance, they can then go in and grill the officer.’
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