Discussion of the Fatca tax regulation at the ISITC conference centered on whether the law makes the financial industry an arm of the US government and just how effectively it does so
In keeping with the looking-forward theme at the recent ISITC Annual Industry Forum and Vendor Show in Boston, there was a great deal of talk in sessions and presentations about future developments in the financial industry and how they might affect operations.
Bob Davies, a senior advisor at tax recovery and reference data services provider GlobeTax, and formerly a managing director at Swift, advanced the view that the Foreign Account Tax Compliance Act (Fatca) is something like a cloak for the US government to use the financial industry as an arm to grab tax evaders. By natural association, registering legal entity identifiers (LEIs) could also be seen as a means for the government to do this.
The panelists to whom Davies presented this idea seemed skeptical. "The monitoring of all that information is an incredibly difficult exercise," said Susan Skerritt, executive vice president, business strategy, development and investment financial markets and Treasury services at BNY Mellon. "It's going to be extremely difficult for any system, let alone the government's system, to track all that and as you suggest, control financial services."
The deployment of Fatca as a Big Brother-like mechanism seems even less likely to be seamless, however, according to Davies' colleague, Ross McGill, a managing director at GlobeTax, who spoke in a session on the global economy at the ISITC conference. "We're extremely aware of Fatca outside the US," he explains. "We have banks in Europe and elsewhere trying to figure out how to comply with US extra-territorial laws without breaching their own local laws. ... It's between a rock and a hard place, and the next 12 to 18 months will be fascinating, to see whether the rock or the hard place wins." McGill alluded to the cooperation the US has from five European countries, but opposition from various other countries.
McGill questions the purpose of obtaining more data through Fatca. "Having lots of data doesn't give you lots of information," he says. "You have to interpret it. ... You can only solve the complexity with standards and automation, which is where ISITC is perfectly represented."
Regardless of where one stands on the justice or righteousness of Fatca, the law does at least give authorities a chance to prosecute bad actors, even though in reality it may be far from perfect and tough to leverage effectively. Having the data-collection mechanism to give tax enforcement some credibility is a long way from a relentless police state.
- Boston Trust Taps SS&C for Hosting, Data Management Outsourcing
- Cambridge Semantics Taps Data Scientist Keen for Financial Services Push
- Banks Build MiFID II Specs, Start Search for Vendors
- Xenomorph Increasing Reach and Capabilities With New Funding
- Backstop Solutions Looks to Tap Into Alternatives Space in APAC