Banks advised to follow FATCA for US taxpayers’ accounts

A circular issued yesterday made the advice to do it as per FATCA of the United States

Bangladesh Bank has advised the bank companies which have accounts of US taxpayers to report to the country’s internal revenue service (IRS).

A circular issued yesterday made the advice to do it as per Foreign Account Tax Compliance Act (FATCA) of the United States.

As Bangladesh government has not yet decided to execute an intergovernmental agreement with the US, the obligation can alternatively be discharged at individual bank level by registering and signing ‘Participation Agreements’ with the IRS, it said.

National Board of Revenue also consented on registering with the IRS if a bank has US taxpayer accounts in its books.

FATCA enacted in 2010 requires a foreign financial institution (FFI) to report to the IRS information about certain accounts held by US taxpayers or by foreign entities in which US taxpayers hold a substantial ownership interest.

According to the definition of FFI, all banks as defined in the Bank Company Act, 1991 have come within the provisions of FATCA.

Banks said FATCA may have implications for their customers and operations should register themselves with the IRS and put in place appropriate processes and controls to ensure compliance with the law.

The concerned banks are advised to visit the IRS’s website,for necessary guidance in this regard.

Banks should communicate with the existing customers well in advance of executing “Participation Agreement” with the IRS enabling the account holders to comply with reasonable requests for information or to provide acceptable documentation to meet the FATCA obligations, according to the circular.

Bangladesh Bank said because the agreement requires disclosures which would normally be breaches of the banker’s general duty of confidentiality under prevalent Bangladeshi

laws including the Bankers’ Books Evidence Act 1891, banks are to obtain written consents from their customers before reporting the requested information to IRS.

News Source:- Dhaka Tribune

Dated:- 17-Jan-2014