Business
Caribbean banks concerned about potential impact of new US legislation
Regional banking institutions have expressed concern over the likely consequences for banking in the region over US legislation that could lead to capital flight, loss of customers and the possible revocation of visas.
Representatives of Caribbean Banks and other institutions were met in St. Lucia Thursday, to discuss the implications of the Foreign Account Tax Compliance Act (FATCA), which seeks to discourage, deter and detect offshore tax evasion by US citizens who hold assets abroad, either in foreign financial institutions or foreign entities such as companies.
Regional Financial Consultant Berkley Greenidge told representatives of the Caribbean Association of Banks (CAB) that just the process of setting up and attending to the reporting mechanisms can place a high cost on financial institutions in the region.
“Non-compliance with reporting regulations by officers of financial institutions may have personal consequences like revocation of US visas.
“The real monster is where a financial institution has to provide details of a client’s transaction, an activity normally considered confidential by Caribbean Banks,” said Greenidge, a Director at Price Waterhouse, Eastern Caribbean.
(More: The new US Tax rules and their impact on the Caribbean)
It is estimated that tax evasion costs the American economy US$100 billion annually he said, adding that the legislation was formulated in 2000 to discourage tax evasion by US citizens and residents.
The regulations take effect from January 2014, whatever the outcome of the US Presidential elections in November, and all provisions should be enforced by January 2017.
