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This question came form a Canadian client and I sent the question on to:
=20
Nigel Morris-Cotterill of the=20
The Anti Money Laundering Network
World Money Laundering Report and WMLR Digest and World Money Laundering =
Report: Online are published by Vortex Centrum Limited, a UK =
corporation. Full contact details are at www.antimoneylaundering.net
The question and my Q & A are followed by Nigel's world look at the HSBC =
reporting and an update at what is happening around the world.
Anyone with foreign accounts can expect similar reporting rules.
----- Original Message -----=20
From: RXXXXXX
To: david ingram=20
Sent: Monday, November 03, 2003 9:45 PM
Subject: HSBC form
OK so we have this new form from HSBC to sign. The inferrence is to =
comply with money laundering legislation initiated by the federal =
government. However in bold print on the Account Declaration form it =
says
"I aknowledge written notice of and hereby expressly concent to,the =
collection of credit reports and other financially related information =
about me from third parties, including credit bureaus and credit =
reporting agencies,when it is necessary for providing products and =
services requested by me."
Also, as HSBC is an American based company, they say that if we don't =
sign the form they will have to report any interest we accrue in our =
joint account to the IRS.
What say you?
RXXXXXXXXXX
604-552-XXXX
cell- 604-868-XXXX
----------------------------------------
david ingram replies:
HSBC headquarters is in London, England.
Fax me a copy of the form ot 913-9123 - I have not seen it.
Is the account in Canda or in the US. If it is in the US, it is logical =
that info would be given to the IRS. If it is in Canada and the owners =
are Canadian, there is no requirement of any sort to report to the IRS.
However, if there is a US account holder, reporting to the IRS is =
logical.
For instance, any Canadian account holder with any American Bank with a =
Canadian branch, is having their information supplied to the CCRA.
david
----- Original Message -----=20
From: Nigel Morris-Cotterill=20
To: David Ingram at home - bus at [email protected]=20
Sent: Tuesday, November 04, 2003 12:16 AM
Subject: Re: [inbox] HSBC form
HSBC is indeed a London headquartered bank and it is jointly regulated =
in London and Hong Kong, which was its formal headquarters until =
recently. Both require banks that they regulate to apply at least their =
standards of compliance across foreign operations.=20
HSBC has several wholly owned subsidiaries in the USA. In fact, its =
began its US operations at the time of the Californian gold rush with a =
San Franscisco branch.=20
The requirement to re-identify its customers is driven by regulatory =
demands in the UK, Hong Kong and under the US PATRIOT Act.=20
Although the UK regulator, the Financial Services Authority, has =
recently backed down on their demand that all UK regulated businesses =
re-identify all customers going back to before 1 April 1994 (that is NOT =
a misprint) the announcement was not helpful because it went on to say =
that if a business elected not to go through the KYC procedures for =
previous accounts, but an account which had not been re-identified was =
in fact used for laundering, then the bank and its compliance officers =
would not be able to rely on that change of heart. The very next day, =
the FSA said that compliance officers would not be permitted to insure =
against regulatory penalties for actions or inactions within their =
sphere of influence.
Incidentally, it is not a common provision in law and/or regulation for =
financial services businesses to be required to apply their domestic =
compliance standards as a minimum across the group except where there is =
a conflict with local law in the country where they are doing business.=20
The HSBC clause has in fact three discrete matters arising:=20
first is the requirement to identify new and reidentify existing =
customers: that is in part driven by the above and in part driven by the =
fact that it is likely to become necessary in many jurisdicictions. =
International banks are doing this because a) regulators have identified =
international banking as a high risk area for money laundering and b) =
because a group wide policy is easier to implement and police. You will =
find the same policy in place at most large banks with international =
operations.=20
Secondly, the enquiries provision has been standard in UK banking =
agreements for years. In the USA, this is largely driven by the Fed's =
sudden discovery of risk management - in recent months Greenspan and =
other senior Fed Officers have been exultory about the idea of credit =
scoring at all stages of the banking process. This is in preparation for =
the implementation of Basle II capital accord on risk based banking. =
Unless you have many hours and understand banking regulation and =
management in great depth, don't bother trying to read much less =
understand it. But you can find comments by Greenspan, et al, on the Fed =
website: it's easier to use google to navigate to the parts you want.=20
Thirdly, is the tax issue: this is probably not something that matters =
too much today. But it is being swept up in the review because it is =
probable that it will become important in the next few months and it is =
expensive for a bank to go through each exercise. The background is =
complex and so I will not go into it in detail. But the summary is that, =
under OECD proposals supported by the EU, countries will need to report =
to a foreign account holder's jurisdiction income earned on assets held =
for that foreigner. The USA is already looking towards making financial =
institutions report foreign account holders' information as a prelude to =
information exchange of this sort. So the bank is just covering the =
bases. I haven't seen the form but I don't expect that there is an =
ultimatum in quite the terms you understand it: if the form is a release =
confirming that you are an offshore investor and therefore exempt IRS =
reporting then there will be a presumption that you are an onshore =
investor and that the account will be conducted, and information =
relating to it reported, in that light.=20
Regards
Nigel Morris-Cotterill
The Anti Money Laundering Network
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321=20
New email to [email protected]
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed =
information or consultation and is to be regarded only as general =
comment. Nothing in this message is or should be construed as advice =
in any particular circumstances. No contract exists between the reader =
and the author and any and all non-contractual duties are expressly =
denied. All readers should obtain formal advice from a competent and =
appropriately qualified legal practitioner or tax specialist in =
connection with personal or business affairs such as at www.centa.com. =
If you forward this message, this disclaimer must be included."
Be ALERT, the world needs more "lerts"
=20
This from "ask an income tax and immigration expert" from www.centa.com =
or www.jurock.com or www.featureweb.com. Canadian David Ingram deals =
daily with tax returns dealing with expatriate:
multi jurisdictional cross and trans border expatriate problems for the =
United States, Canada, Mexico, Great Britain, the United Kingdom, =
Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New =
Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, =
Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, =
Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, =
Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, =
Grenada,, Virgin Islands, US, UK, GB, American and Canadian and Mexican =
and any of the 43 states with state tax returns, etc.
=20
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