CASTRIES: The Bankers Association of St. Lucia (BASL) is seeking public support as it moves to adhere to the new reporting requirements for United States clients which form part of the Foreign Account Tax Compliance Act (FATCA).
BASL said that the legislation is intended to increase transparency for the Internal Revenue Service (IRS) with respect to U.S. persons that may be investing and earning income through non-U.S. institutions.
The banking group said that it is committed to having financial institutions operating in St. Lucia ensure regional compliance with FATCA and was calling “on the public to assist financial partners in that regard”.
BASL said that as of July 1 this year, financial institutions in St. Lucia and the rest of the Eastern Caribbean Currency Union (ECCU), now classed as Foreign Financial Institutions (FFIs), were required to adopt new account opening procedures in order to comply with FATCA rules.
“The Bankers Association of Saint Lucia announced that local FFIs have for several months been preparing and training employees for the changes and St. Lucia’s finance sector is ready to comply by the deadline date. Individual institutions have also issued notifications and information about the new rules to customers.
“The BASL understands, however, that educating the public will be an ongoing exercise and encourages all financial institutions to ensure that employees and clients understand the new regulations and also encourages the public to comply and be co-operative during the process,” said the BASL.
According to FATCA, financial institutions must provide all information on assets of US$50,000 or more held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold substantial ownership interest.
BASL said that failure of an FFI to submit information could result in a 30 per cent withholding tax levied on with holdable payments and the potential loss of critical correspondent banking relationships.
“This would affect customers’ ability to transact with the USA, our main trading partner”, the banking group said.
BASL said FATCA does not replace the existing U.S. tax withholding and reporting regimes. However, the banking group said it does add additional requirements and complexity to the existing regimes.
“The Association notes that the impact of FATCA is far reaching and impacts any person, U.S. or foreign, to the extent that such person is involved in making or receiving payments that fall within the scope of FATCA,” said BASL.