Business
Caribbean banks concerned about potential impact of new US legislation
The provisions include withholding amounts on income and gross proceeds.
According to the regulations FATCA would not apply to non-US citizens, or to citizens with accounts of US$50,000 or less, and with companies with US$250,000 or less in foreign bank accounts, including accounts in the offshore banking business, an activity crucial to the economic development of some Caribbean governments.
The law may have a long reach as US Green Card holders and non-US foreign financial institutions serving US citizens fall within the range of FATCA.
However Greenidge said that given the scope of FATCA regulations, persons with US telephone numbers, addresses, or who regularly transfer US funds to the US are likely to come under the radar of the Inland Revenue Service (IRS).
He said that just the process of sorting out who is a “US person” would create a “significant burden” for regional financial institutions and for the customers who are to prove they are not “US persons.”
Compliance with FATCA would represent a significant shift in the way banks make money, Greenidge warned, adding that “cost of compliance may be passed on as service charges to ordinary customers or financial institutions in the region who may not be US persons.” -CMC
