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Jamaican PM Urges FATCA Compliance

by Amanda Banks, Tax-News.com, London

28 November 2012


Speaking at the 39th annual conference of the Caribbean Association of Banks (CAB), Jamaican Prime Minister Portia Simpson Miller urged regional financial institutions to ensure that they consistently met international standards and in particular that they should not take a "knee jerk" stance against the US anti-evasion Foreign Accountant Tax Compliance Act (FATCA).

In the face of considerable trepidation from local financial institutions, Simpson Miller warned that it was important not to give the impression that they were opposed to the control of money laundering and illegal money transactions.

"It is of vital importance that, even as we seek to establish to your USA counterparts our valid concerns about the legislation, we make it unambiguously clear that we are no less concerned than they are about questionable financial transfers." She added: "Let us not start off with a knee-jerk reaction of opposition. By putting myself in the shoes of the American authorities, I understand only too well the factors which have motivated passage of that legislation,"

Simpson Miller also made it clear that she understood the concerns of the delegates present. "From our vantage point we have to make it clear that even whilst recognizing their motivation, we would wish for consideration to be given to the possible negative repercussions on our institutions. This is so, given the efforts which have been made to attract legal foreign exchange into our countries."

She concluded: "I therefore say to the Association, let us move swiftly to identify our reservations. Let us indicate the ways in which we can assist with achieving the objectives of the FATCA legislation in ways which are not detrimental to the stability of our institutions."

Financial institutions are being asked to report the names and tax identification numbers of US citizens with offshore accounts to the Internal Revenue Service (IRS) if they want to continue doing business with US clients. This poses a threat to the confidentiality clauses present in many of the region's banking Acts, a dilemma which the Prime Minister acknowledged to the delegates.

Local institutions have also argued that the new compliance rules will come with burdensome implementation costs and cause an outflow of funds from the formal banking system.

Addressing the conference, Senior Deputy Governor of the Bank of Jamaica, Myrtle Halsall said that, although no decision had been made about how the government would approach the FATCA issue, a draft Cabinet submission had been prepared and was awaiting the ministers' signature. On the wider issue of the region's response to the challenge she said that: "The central banks are looking at models that are available to make a recommendation as to which one will best suit us. The attorney-general in each country is looking at the legislation to see if there is any conflict and how we will deal with this."

TAGS: compliance | tax | business | Jamaica | offshore | legislation

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