FATCA Compliance at SCB for US citizens

[Bob]

(Some or all of the following comments may relate to US citizens only)

 

Because the term ended on my fixed-term account I keep at SCB (Siam Commercial Bank) for retirement visa/extension purposes, I renewed a new fixed-term account today and, as part of the process, had to fill out a W-9 (standard US form titled "Request for Taxpayer Identification Number and Certification") and another internal SCB form (titled partially in English: "Form for Declaration of Status as U.S. Person or Non-U.S. Person).  It was no big deal but obviously is part of compliance by the bank with the FATCA legislation.  I'm guessing SCB will require  all US citizens (and perhaps some others) attempting to open an account to fill out at least one of the forms.

 

As noted, it was easy and was handled routinely and quickly.  Contrary to a few of the "sky-is-falling" folk who were basically predicting that Thai banks would no longer deal with US citizens,  it appears that all that will change is the addition of a new form or two.

[Up2u]

Good info, Thanks!

[Guest shamahan]

I would not jump the gun. Around 8000 FFI registered with IRS in connection with FATCA. One thing to register (which is easy).

Another thing to comply with the requirements (which is almost impossible if they are literally implemented). I have experience with a number of offshore banks and while so far nobody closed my accounts, I already have various headaches. Technically, each bank needs only W-9 form and depending on legal conditions of the jurisdiction the permission to provide client information to US authorities. It looks simple. In reality various banks started impose various constraints on my accounts (not in Thailand so far).

[Guest shamahan]

 delete

[Bob]

I would not jump the gun.

 

Never jumped the gun but, as you know, I've argued from the beginning that the sky-is-falling folk are simply full of beans. 

 

The only way the US law is implemented in other countries is via the intergovernmental agreements which are negotiated between the US and the given foreign government.  And it's axiomatic that the given foreign government (and its banks once that foreign government allows or compels their banks to comply) will only have to do what the intergovernmental agreement provides (i.e., what the foreign government agreed to do).

 

Nobody who has or will obtain bank accounts in Thailand will likely notice any difference at all. 

[Guest shamahan]

 

The only way the US law is implemented in other countries is via the intergovernmental agreements which are negotiated between the US and the given foreign government.  And it's axiomatic that the given foreign government (and its banks once that foreign government allows or compels their banks to comply) will only have to do what the intergovernmental agreement provides (i.e., what the foreign government agreed to do).

 

Nobody who has or will obtain bank accounts in Thailand will likely notice any difference at all. 

It is factually incorrect. The FFI of countries which entered a certain type of intergovernment agreement with US regarding FATCA

(there are currently two types of such agreements) do not need to register with IRS. They are considered automatically in compliance. The reason why major Thai banks needed to register with IRS is precisely because there is no currently such an agreement between Thailand ad US. It does not mean that they do not need to comply. Those banks that do not comply are subject to 30 percent of US taxes on certain income derived from operations in US. And once again I already need to deal

with a number of quite unpleasant situations in connection with FATCA. In particular, I am dealing with an international bank

which made a decision to keep US customers and obliged all branches in various countries to comply with the law.

The problem is that some of these branches do not want to deal with US customers and while they cannot close their accounts, they do what they can to force above mentioned customers to close their accounts on their own.

Even in Thailand, Kasikornbank require W-9 only from new American customers, whereas other banks (correctly) require it from

all US persons. And it is just the beginning. I am not stating that Americans will necessarily have problems with Thai banks. But it is highly premature to assume that they will not. This is because very few people in Thai banking community really understand the law.

Besides, there are people in US congress who think that by entering intergovernment agreements and selectively enforcing pieces of the law Obama administration exceeded their powers. While most probably FATCA  is here to stay, it is a total mess and all ramifications of the law will become clear with time.

[Guest shamahan]

I see that Thailand is on the list of countries which expressed an intention to sign intergovernment agreement (thank you, junta!).

That probably makes previous registrations of Thai banks redundant and hopefully will make the whole process smoother.

[vinapu]

 

This is because very few people in Thai banking community really understand the law.

 

And no wonder, after all this is foreign law , not a Thai one, forced on Thai banks, 

[Guest shamahan]

And no wonder, after all this is foreign law , not a Thai one, forced on Thai banks, 

This is true. However, this is a general trend supported by many governments to exchange information about offshore bank accounts of their citizens. If US from the very beginning have chosen the path of intergovernment agreements, my guess would be

it would not create any problems. Instead, monstrocity like FATCA was created which is really arrogant and practically nonimplementable law.

[Bob]

. Instead, monstrocity like FATCA was created which is really arrogant and practically nonimplementable law.

 

We're all entitled to our opinions, I suppose.  The goal of FATCA was to catch those laundering money internationally and those who were using foreign accounts to evade their tax obligations (somewhat ironic given the low percentage of gross income the wealthy really pay in the US).  Admirable goals in my view.

 

Every country has the right to create the requirements to deal with its banking system and, yes, given the disparate economic power of the US, FATCA to some was viewed as more bullying from the US; however, so far, the only real enforcement of FATCA has been through either voluntary compliance or through the signing of the mentioned intergovernmental agreements.

 

The notion that FATCA imposes horrible burdens on foreign banks is just talk.  All those banks have computer systems and electronically reporting once a year to the US information about US citizens accounts seems rather easy to me.  As for burdens on individuals here in Thailand, none as far as I know (well, other than signing another form or two when you open a new bank or brokerage account here).   

 

The sky hasn't fallen....nor will it.

[Alexx]

The notion that FATCA imposes horrible burdens on foreign banks is just talk.  All those banks have computer systems and electronically reporting once a year to the US information about US citizens accounts seems rather easy to me.

Right, and all these bank computers worldwide just reprogram themselves magically or, that failing, receive updates free of charge and in no time. 'Cause that's how it works. 

 

Don't kid yourself, this is at the very least a major PITA for foreign banks and it will make it more difficult and/or expensive for Americans to get and maintain bank accounts abroad. Most banks will probably comply, but saying they do so "voluntarily" is beyond cynical. Others will simply get rid of American customers if their business doesn't justify the cost of compliance.

 

Some examples from around the world, reported just yesterday:

http://online.wsj.com/articles/expats-left-frustrated-as-banks-cut-services-abroad-1410465182

[2lz2p]

I see that Thailand is on the list of countries which expressed an intention to sign intergovernment agreement (thank you, junta!).

That probably makes previous registrations of Thai banks redundant and hopefully will make the whole process smoother.

 

Based on some articles in Bangkok Post in early part of the year, Thailand was in process of entering into a intergovernmental agreement to provide the information; but noted Parliament would need to enact/change the Thai Law to allow disclosure.  Then came the Bangkok demonstrations, dissolving of Parliament, and then the coup.  Consequently, no change in the law and no signing of an Agreement.

 

FACTA provides for either intergovernmental agreements OR individual agreements with the financial institutions.  Several Thai Banks have entered into individual agreements.   Here is thread on another Board with links to list of Thai Banks that have signed individual agreements: http://www.gaybuttonthai.com/viewtopic.php?f=3&t=6557

[Bob]

 Don't kid yourself, this is at the very least a major PITA for foreign banks and it will make it more difficult and/or expensive for Americans to get and maintain bank accounts abroad. Most banks will probably comply, but saying they do so "voluntarily" is beyond cynical. Others will simply get rid of American customers if their business doesn't justify the cost of compliance.

I have no sympathy at all for the banks anywhere.  If they want American accounts, they'll comply; if not, they won't.  And I disagree entirely that the compliance part of it is any major PITA to the banks. Their IT people might spend some time getting it set up but, once that's done (rather easy for an IT professional), the annual reporting wouldn't take much more than a few minutes of pushing some buttons.

 

I suspect (but actually don't know) that Thai banks already electronically report to Thai Treasury as to all foreign accounts held in their banks. But I do know for a fact that SCB reports annually to the Thai Treasury as to the interest I earn on the account I keep for retirement visa (extension) purposes and, of course, SCB pays over the 15% withholding to the Thai Treasury (no worry, I get the withheld amount back after the fact). Adding some minor programming changes, I can't see why they couldn't isolate American accounts in a separate list and then electronically send that info to the IRS too.  It's certainly no major undertaking.

[Up2u]

I agree that compliance at the IT will be a snap. However, it is the staff training and problem solving that will be the PITA. Most Americans will complete their W9 truthfully but what about honest mistakes and fake tax ID numbers. What happens when those IRS computers come back with a mismatch? If I was a Thai bank I would want to see the SS card and/or a copy of Form 1040.