There are Many Ways to Catch FATCAts: What Impact will the Foreign Account Tax Compliance Act (FATCA) have on Caribbean Nations' Privacy Laws and Costs Associated with Non-Compliance

• Author: Charles Bowen Jr.
• Position: Is an Attorney at Law. He has worked for the United States Attorney's Office-Western District of North Carolina and District Attorney's Office of Broome County, N.Y.
• Pages: 968-991

e Indonesian Journal of International & Comparative Law

ISSN: 2338-7602; E-ISSN: 2338-770X

http://www.ijil.org

© 2014 e Institute for Migrant Rights Press

968

THERE ARE MANY WAYS TO CATCH

FATCATS

WHAT IMPACT WILL THE FOREIGN ACCOUNT TAX COMPLIANCE ACT

(FATCA) HAVE ON CARIBBEAN NATIONS’ PRIVACY LAWS AND COSTS

ASSOCIATED WITH NON-COMPLIANCE

CHARLES S. BOWEN JR.

Attrney at Law

E-mail: bowenc@alumni.charlottelaw.edu

e growing concept of nancial institutions operating as active cross-border

“tax intermediaries” is one of the underlying principles for more aggressive and

multinational legislation; however, there is the potential for substantial ramications

and externalities, both in the legal and economic arenas, that may derive from

FATCA and subsequent legislation. Pursuant to this determination that FFIs

are being utilized and called upon to implement more eective automated tax

information exchanges with domestic and international tax authorities, the issue for

underdeveloped Caribbean nations is nding a method to operate in the most cost

eective manner without violating domestic laws and existing treaties. is can also be

benecial towards maintaining some form of economic sovereignty. e most optimal

method in doing so is identifying the extent that existing treaties and/or agreements

provide guidance as to how FFIs can operate in an automated information exchange

because of the colossal implementation and operational information technology costs

that are associated with complex compliance reporting of private data. Once potential

problems are identied, the most logical step is to determine how to enter an IGA

that promotes economic stability, privacy considerations, compliance cost avoidance,

and mitigating any business disruptions that can potentially exceed any penalty or

ne under FATCA. e Caribbean nations have demonstrated a more sophisticated

and eective cross-jurisdictional compliance platform than prevailing perspective of

their nancial services regulatory scheme; however, the implementation of FATCA

Charles S. Bowen Jr.

There are Many Ways to Catch FATCAts

969

is the most pervasive and imposing legislative act yet for tax evasion and the ability

to utilize the IGA system for preventive measures in all facets of compliance is most

practical in considering this emerging and early phase of FATCA’s unilateral rather

than bilateral approach.

Keywords: Accounting Law, Banking and Finance, Bankruptcy Law, Corporation and

Enterprise Law, Securities Law, Tax Law.

One of the great mistakes is to judge policies and programs by their

intentions rather than their results. . . . Many people want the

government to protect the consumer. A much more urgent problem is to

protect the consumer from the government.Milton Friedman1

I. INTRODUCTION

In 2009, in the wake of a nancial crisis with accompanying scrutiny

of the banking industry, and in the midst of a re-election campaign,

President Barack Obama stated: “I did not run for oce to be helping

out a bunch of, you know, fat-cat bankers on Wall Street.”2 With an aim

towards preventing tax evasion, money laundering, and terrorist nancing,

extraterritorial legislation has become the rule, rather than the exception

in recent years. With various tax evasion, anti-money laundering, and

nancial disclosure pieces of legislation coming into eect as of late, the

most imposing and impactful law is the Foreign Account Tax Compliance

Act (FATCA).

FATCA is a recently enacted law that is a part of the Hiring Incentives

to Restore Employment (HIRE) Act of 2010 and created four new

1. Interview with Richard Hener onT O M(Dec. 7, 1975), available

at http://www.youtube.com/watch?v=vOr668rBpIE. Milton Friedman was an

American economist, statistician, and author who taught at the University of

Chicago for more than three decades. He was a recipient of the Nobel Memorial

Prize in Economic Sciences, and is known for his research on consumption

analysis, monetary history and theory, and the complexity of stabilization policy.

e Economist described him as “the most inuential economist of the second

half of the 20th century...possibly of all of it.”

2. David Jackson, Obama: ‘Fat-cat’ bankers owe help to U.S. taxpayers, U.S.A. T,

Dec. 18, 2009, 10:12 AM, http://usatoday30.usatoday.com/money/industries/

banking/2009-12-13-obama-bankers-small-business_N.htm.