CBC is reporting: Four Reasons Tiny Cyprus Matters To Canada.
Under the terms of the Cypriot proposal that emerged Friday evening from EU, any bank account with less than €100,000 in assets would see 6.75 per cent withdrawn as part of the one-time levy. Anything over that level would get an even larger haircut — 9.9 per cent.
“Pay attention, please,” Southwest Securities managing director Mark Grant told clients in a recent note. “The European Union and the European Central Bank and the IMF have just advocated the confiscation of private property for their own indulgence.
“Bank accounts are not bonds or stocks or some other form of investments,” Grant said. “It is private property like your house or your car. Germany, France et al came in and said, ‘We want it and we are taking it.'”
Faith that your bank savings are safe is the bedrock of a healthy economy. So a lack of faith in the banking system is the kind of thing that leads to the next reason Canadians ought to be concerned about Cyprus.
All of the reasons given are very valid about why we should all be very concerned about what is happening in Cyprus.
Does the CBC know what is happening in Canada with FATCA? That should matter to Canadians even more.
Yet, our government and media remain silent.
43 thoughts on “What The FATCA Does Cyprus Have To Do With Canada?!?”
For some reason, my link to CBC story is not working in the post, so here it is.
Just after I posted this CBC and other media are reporting Cyprus has now voted against the bailout plan to raid individual bank accounts. What’s next?
Well, possibility only raiding ng bank accounts over €100,000. Not much incentive to save money for your retirement, children’s education, etc.!
Plus, Cyprus central bank governor is predicting 10% of deposits will be withdrawn when banks reopen. I would be pulling out a lot more that 10%.
The EU bailout is now up in the air. But, why would anyone think robbing bank accounts of private citizens would be the solution?!?
Yes, Blaze. FATCA and citizenship based taxation are both equally pernicious instances of a government or quasi government agency, unlawfully over reaching and expropriating citizen’s private property for its own ends.
Credit Union Central of Canada in a bulletin to their members is saying that the US Canada IGA is being held up due to the “Constitutional” concerns.
More from Credit Union Central:
Several countries have concluded Inter-Governmental Agreements (IGA) with the U.S. that modify and streamline the requirements for their own country.
The Canadian government remains in “intense” IGA negotiations with the U.S. that may be delayed by Canadian constitutional issues. As a result, while the broad outlines of FATCA requirements are known, much detail is still to come.
Canadian Central is engaged in continuous dialogue with Finance Canada and the Canada Revenue Agency (CRA) to ensure that, first, our strong opposition to this new compliance burden is heard and, second, exemptions are maximized and compliance obligations minimized and practical, especially for small financial institutions.
Thanks Tim. I’m going to also post the link on the thread on the Charter.
Interesting that they say an IGA is being delayed due to constitutional issues, then they go on to speculate there will be an IGA which has info submitted to CRA to send to IRS.
That is what the VP of my credit union said he expected would happen. (They are one of the credit unions with more than $175 million.)
That pesky little matter of a “constitutional issue” just keeps getting in the way!
What I have heard is the banks really want the IGA. Credit Unions are far more reluctant but don’t want to be completely left out of the negotiations if they happen. Among credit unions some are “militant” and “hardline” like we are but others view FATCA as a pure dollars and sense issue. IF there is no IGA basically it will be up to each credit union and its members whether to comply and in all likelihood the “militants” won’t.
It’s a travesty that ‘banks really want the IGA’. They should really want to uphold our constitution – aren’t the executives, boards, managers, and tellers Canadian citizens, too? Proof, that once again, money, or the desire to make money, trumps everything else.
I don’t think any of the financial institutions would ever be willing to give away that 30% sanction. It’s pathetic that we are so heavily invested in the US and so much of our trade is with them, etc. Perhaps we could start expanding into new/different markets, etc.
The whole thing makes me feel I did the right thing by renouncing.
How legal is that 30% withholding? Would they really be able to do it with impunity?
@Chris: More “official theft” and “stealing what has already been stolen.”
One interesting and unique strategy is that of “shoot the hostage” i.e. kill the Canadian banks business in the United States before FATCA can. For example create a fake website directed at customers of TD Bank in the US telling them why they should move their accounts to another bank. Make up fake and false reasons.
Well here’s a great incentive for saving.
The latest plan from Cyprus is now to do a one-time levy of 25%–but only on accounts of more than 100,000 euros. I don’t know if that is per individual account or per an aggregate amount held by an individual in a bank.
This has increased from the 9.9% that was earlier proposed for accounts over 100,000 euros. There are no now plans for a grab from accounts under 100,000 euros.
Why doesn’t anyone see this as sheer robbery? This is insane.
It’s immoral, heartless and shameful.
Does anyone expect the same eventually due to FATCAT?
@Nobledreamer: I hope not, but nothing IRS (International Robbery Society) and it’s FATCA ( Foreign Attach to Control All) partner would do surprises me at this point.
I just hope Cyprus does not give governments around the world any ideas. What a simple solution. Just scoop up the savings of responsible people who have saved while those who are in debt over their heads (both individuals and governments) continue merrily along.
Yet, isn’t that almost what IRS is doing with FBAR penalties of 27.5% to 50% or more for failure to file a report on your perfectly legal assets in the country where you live, work and pay taxes (and are often a citizen)?
Is that why IRS needs FATCA? So they can implement more penalties on people leading honest lives outside of US? Isn’t the threatened 30% withholding to banks a form of robbery? It certainly is intended to instill fear and force banks to comply by violating their own country’s laws and constitutions.
In my books, that is criminal extortion.
@Nobledreamer: Here’s more from Japanese Times.
“What happens in Cyprus should stay in Cyprus” says the author. But, it may not end there. Scary stuff.
Here’s more from CBC.
“People are fearful. They’re not happy. They can’t get money out of the bank, except a little here and there from the ATM’s.” Yep, that and a threat to confiscate 25% of your savings will make someone fearful and unhappy.
Just like Canadians and others around the world are fearful of US attempts to terrorize banks and individuals to provide information on their financial holdings to a foreign government. Why isn’t CBC reporting on that?
CTV is now reporting Cyprus banks are limiting ATM withdrawals to 100 euros per day.
The CBC story said the people are fearful and unhappy. I suspect those words don’t begin to describe the rage and horror the Cypriot people are feeling.
And now NZ! I begin to feel the pit of my stomach again, just as when I first heard about FBAR.
Is this really LEGAL? How can this possibly be rationalized?
@Nobledreamer: The Russian Prime Minster says “Stealing what has already been stolen continues.”
Who would ever have thought Russia would be speaking out against such a travesty while the EU supports it?
This reminds me of Richard Nixon “When the President does it, that means it is not illegal.”
How did that work for Tricky Dick? Not well.
I suspect things are also not going to work out well for Cyprus, EU or the rest of the world on this or on FATCA.
Why do I have visions of men in suits hanging from lamp posts?
Cyprus Farce: “It is purely and simply official theft.”
I might take a some what contrarian opinion. A few days ago I said perhaps the solution to FATCA it to “Shoot the Hostage.” I think that is what might have just happened. The two biggest banks in Cyprus are now DEAD if they had been alive don’t kid yourself they would have been begging/demanding the Cyprus government sign an IGA with the US. Unfortionately, for the US(IRS) the Cypriot hostages were shot before the IRS could shot them.
In the whole scheme of things this might not be such a great idea but “Shooting the Hostage” never is.
@Tim: Now, they are reloading to shoot the hostage’s hostages.
Pretty scary to think where “official theft” and “stealing what was already stolen” is headed.
I’m sure it won’t be long before International Robbery Society (IRS) finds a way to take their ransom from the hostage crisis.
For whatever its worth I am hearing we are about one month away from an IGA signing. Who knows if they will follow through. It seems like mid April will be important.
@Tim: Any word if the IGA will target all “US persons” in Canada even if they are Canadian citizens or if it will (as Peter Hogg and several of us have suggested) be only for US residents who have accounts in Canada?
At least I can still hope!
BBC is reporting “temporary” controls on bank withdrawals and transactions. I hope that’s not “temporary” like income tax was originally meant to be.
Plus, “the Dutch finance minister who as head of the Eurogroup played a key role in the Cyprus negotiations, said the deal represented a new template for resolving future eurozone banking problems.”
What will that do to instill confidence in European banks and others around the world>
Supposedly the Department of Finance would just assume fight it out in court I don’t know yet if the Department of Justice will agree(Justice Canada has the defend the government not Finance). We are probably one month plus from any type of legislation being introduced in the House of Commons.
This is what Arrow posted earlier today on Brock:
March 25, 2013 at 11:41 am
Well, I hope the anti-dollar movement is also an anti-FATCA movement because it looks like Canada is going to throw us all under the bus.
Latest word I have from my source is that a draft IGA has been completed, and the FFIs will be given a verbal briefing on it the first week in April. It won’t see the light of day for a few weeks after that because the feds are still trying to coax some crumb out of the Americans that will allow them to sell it as a benefit for Canada (hence Flaherty’s recent rhetoric on offshore tax cheats).
Feds were specifically asked about Charter issues, and their reply was a vague “we expect to comply with all our obligations.” Who knows what that means, but that’s as forthcoming as they were on that one.
Apparently the major angst right now is how to authorize CRA to do the dirty work. They can make an announcement about an IGA without involving Parliament, but the CRA authorization requires an amendment to the Income Tax Act. I’m sure they are looking desperately for ways to accomplish that, but so far haven’t found one. This government by stealth is deplorable, and these guys need to be out of power very soon. And I’m a small-c conservative.
So get those class action engines warmed up and ready to go, because Harper is going to do this. As usual, the media is asleep. I think I’ll fire this over to Elizabeth May — too bad she has so little power and influence, but at least she has principles she’s willing to fight for. No one else in that House does.
There actually a few more obstacles that Arrow didn’t mention. Clearly they want to do a deal but can’t seem to figure out how to sell it politically and on what timeframe. If they have to wait until the fall on this they WILL be in VERY dangerous political territory.
So you mean the obstacles as related to ones the government will have as opposed more on our plate? I am totally depressed by this…….
BTW Blaze, I keep trying to sign in, it lets me and then when I click on “visit site”, the sign-in isn’t valid anymore…??????
another perspective on Nixon:
Chilling, but it does not surprise me.
Most of us who were in US during Vietnam heard rumblings that things like this were happening.
That’s why some of the members here and at Brock left US and moved to Canada.
I personally lost high school friends in Vietnam. Another committed suicide soon after returning. A cousin died about 10 years later, probably from exposure to Agent Orange in Vietnam. Others were seriously injured. I have friends who still have PTSD.
Then, of course, there was the cost to the Vietnamese people and the country. A former colleague was on of the “boat people.” She has been in Canada almost as long as I have.
Their are several hurdles for the government. Parliament probably won’t be able to vote until the fall.
As much as I want to burn the IGA when its released I would read it first. I have a hunch their might be elements of Bill Clinton’s goofy don’t ask don’t tell policy.
Basically the career civil servants like Kevin Shoom believe that NOT signing an IGA would lead to a Cyprus like collapse of the Canadian banking system. They don’t care about the charter or anything like that. There opinion as civil servants is not signing an IGA will stop the ATM machines from working. They haven’t broken this news yet though to Harper’s boys and girls at PMO who have the final say on everything.
@Tim, others: I don’t have a problem with an IGA if it is the type Peter Hogg suggested: “A preferable approach would be to limit the collection of information by financial institutions to the information already collected, and already provided under the existing tax treaty. That information focuses on RESIDENCE. In other words, any IGA should modify the due diligence procedures specified in the Model IGA by stipulating that any account held by a person who is a resident of Canada for Canadian tax purposes would NOT identified as a U.S. reportable account….”
Do Shoom and other civil servants really think an IGA would avoid a run on the banks? One million Canadians suddenly learn all their financial information, including that held with spouses, education savings for children, etc, will be reported to a foreign government. Do they think there won’t be a run on the banks then?!?
I pulled all my U.S. investments out over 18 months ago. Such action in Canada would cause me to do exactly the same.
“Harper boys and girls” considering Charter issues does not exactly instill confidence in me.
I have put Joe Arvay on notice to be on standby and have asked how quickly we can launch legal action if it comes to that. I haven’t heard back from him yet.
@Nobledeamer: I have alerted Outraged about your issue. She is our resident techie. She will try to look at it today.
I am little reluctant to say this in case Shoom and co. read this blog but I think they have screwed in a very critical way in these negotiations. I had already remembered this but had to re-read it last night.
Under Canadian constitutional convention once a treaty is signed parliament MUST be given 21 sitting days to analyze it before legislation is introduced to implement it in into domestic law. What this means is it is already too LATE for Flaherty to stick FATCA in his spring omnibus budget bill unless he wants to wait until June to introduce it which will cause big problems procedurally(The House Finance committee is already expecting the spring omnibus budget bill to be at second reading by early May). So Flaherty will have to wait until the fall or introduce FATCA implementation as a “standalone” bill and essentially pour gasoline all over himself and light a match.
Flaherty’s problem is the House of Commons goes on recess for the first two weeks of April and then again during the third week of May which blows a lot of holes in the 21 day cooling of period for implementing new treaties. By my count if Flaherty doesn’t sign this week he can’t introduce any legislation to implement FATCA until May 21st. That is really late. Too late to do anything prior to the fall.
Two other issues the PMO boys and girls want to do one of two things this fall either call a “snap” election and try to catch Justin Trudeau off guard(ala Chretien and Stock Day) or do Blaze’s favorite act of parliament have ANOTHER prorogation. Unfortunately for the government as fun as they seem to find prorogation you can’t pass any legislation during it.
On another note I really don’t like the Canadian Senate but if they were to throw a monkey wrench into FATCA I would have a new found respect for the body(despite Mike Duffy forgetting for two month where he lived)
Blaze, the other issue is that government bills other than the budget ones simply don’t move that fast in a parliament system(despite what many Americans think) Right now there are many government bills sitting at first reading for weeks. Even more than this they don’t even get a sponsor introduction speech for weeks.
Look at S-17 right now in the Senate.
The other issue with prorogation is all government bill die even if they made it to second reading. One more issue to I am trying to find an answer too is what is the historical tradition for imposing time allocation(stopping filibusters) on bills solely to implement treaties. As bad as the HarperCons can be on some issues they still stick to some parliamentary conventions.
Here’s an article about our current Canadian government and new immigrants.
One paragraph is true, but chilling:
The habitual Harper government motif of “we’re welcoming the grateful chosen newcomers and kicking out the freeloading bad guys” is bad enough for the way it sometimes rides roughshod over legal and human-rights complexities. Adding to this with exploitative, non-consensual and misleading camera work makes it all the worse.
So, should we really believe they give a darn about the privacy, banking, human rights and Charter rights of long time Canadian citizens who came here from somewhere else?
I wish The Star and other media would report on that. Any luck Tim getting anyone other than Arrow to take it on?
One US Congressman wants to “make the U.S. the largest tax haven in human history.” All the while, the US continues it’s FATCA Attack on honest taxpayers living elsewhere.
As Alison Christians says, “You just cannot make this stuff up.”
Cyrpus Braces For Bank Openings
“It’s going to be a very messy situation. Everybody will go there and start shouting for their money.”
Big depositors at the largest bank could lose as much as 40% on their deposits and those at the second-largest, Cyprus Popular Bank PCL, could lose as much as four-fifths of their uninsured deposits. (Yikes! That’s 80%. They have learned well from IRS OVDI.)
Capital controls are also planned.
Here’s how one man has been affected by the “official theft” in Cyprus.
Plans for medical care, buying a home, helping his elderly mother and putting his grandchildren through university are all destroyed.
Globe and Mail says what happened in Cyprus can’t happen in Canada. Really?
The exact same thing may not happen here. Yet, our own government remains mute on whether or not they will give our financial information to a foreign government that can’t manage it’s own finances or protect it’s own residents from identity theft through income tax returns.
Plus, of course, there is the nightmare in Europe and South American of having bank accounts closed just because of where one was born.
Yikes! Two weeks ago, reports were Cyprus losses to depositers would be 6-9.9%. Then it went to 25%. Now it’s 60% for large depositers. If I’m reading this article correctly, those people won’t actually get their money, but rather will get shares in the bank of 37.5% (which means a loss of even more than 60%)
Am I reading this right? Can this be?
Can Canada become Cyprus? Not likely say some bankers and others.
But, CBC reports the recent budget may indicate otherwise.
“The government proposes to implement a bail-in regime … designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability,” says Finance Minister Jim Flaherty’s March 21 budget, on page 144.
That would be done, the document says, through the rapid conversion of “certain bank liabilities.”
Ottawa’s budget document leaves the definition of “certain liabilities” to the reader’s imagination.
Globe and Mail says Ottawa Is Clearing Up The Confusion Over Bank Bail In
Considering Ottawa’s refusal to clear up confusion around FATCA, I’m not exactly reassured.
I continue to be astounded and outraged that the Finance Minister will not tell us clearly and that our fundamental legal and constitutional rights will not be violated so our banks can meet the demands of a foreign government.
That, my friends, may answer the question that began this thread. What The FATCA Does Cyprus Have To Do With Canada?!?
Tim, do you have any information on this?