It’s time for Canadian residents to close their bank accounts and move their money to a credit union.

I don’t believe this information has been posted yet on Sandbox, so I’m cross-posting this information from Brock (and from some private emails in the past couple of days).

It is my understanding that under FATCA, credit unions are exempt from reporting any accounts held by Canadian residents, if those credit unions have fewer than 2% of their accounts held by non-residents of Canada. This was stated in a draft publication issued by Credit Union Central of Canada, earlier this month, provided to me privately by someone who managed to get it from CUCC’s website.  The document says it is still a draft, but also says “while final Guidance is not expected until sometime in May, the current version is complete enough to be a reliable source.”  They are collecting comments from member credit unions to provide to Finance Canada by April 4.

With the above qualification, I quote directly the following paragraph in the document provided to me:

“Credit unions which hold less than two per cent of their deposits for non-residents of Canada will qualify for reduced reporting obligations. They will identify and report only accounts of members who are U.S. persons and who are not residents of Canada. Unlike internationally active banks, they will not be required to report accounts of members who reside in Canada. “

I just minutes ago received an email reply to a website query I sent to Alterna Savings, a large Ontario credit union where I’ve been a member for nearly 40 years, asking on behalf of a non-Canadian-resident relative whether a non-resident can open an account with them.  I sent this email after reading the above-referenced Guidance document.

The reply is sorry, we don’t offer accounts to anyone not a permanent resident of Ontario.

Hence Alterna Savings also has 0% account holders non-resident in Canada. Hence they are FATCA-exempt. Even though they are well over the $175 million threshold. According to the information provided by Credit Union Central of Canada to its members, Alterna only has to report accounts held by US persons who are not residents of Canada. But with no accounts held by persons other than Ontario residents, this means Alterna has no requirement to report any of their accounts to CRA and then to IRS.

I don’t know, but I suspect this will be true of all credit unions in Ontario and probably all provinces of Canada, though this probably needs verification. Another poster at the Brock website has already verified with a British Columbia credit union that they don’t accept accounts from persons not permanently residing in that province. I invite other visitors to this website to make inquiries in their own provinces and report back on this thread what they’ve learned.

If you are a Canadian still looking for a reason to switch to a credit union (and there are excellent non-FATCA reasons for doing this, like depositor ownership of the institution and voting rights), look no further.

If you want your financial privacy respected in Canada and you have US indicia, you aren’t going to get respect for your rights from any chartered bank – only from a credit union that doesn’t allow non-Canadian-resident persons to open accounts with them. Which I believe is most credit unions, perhaps all but I’m not sure about jurisdictions outside BC or Ontario, or Ontario credit unions other than Alterna. But I am sure about Alterna; I have their email in reply to my inquiry on their website, signed by a named employee.

I’d do this even if you have or are getting a CLN (I’ve had a CLN now for more than 35 years). The banks folded on FATCA. They didn’t put nearly enough of a fight, they pressured our government to cave in, so make them pay where it will hurt them – through withdrawal of every penny you have with them, depositing to a credit union instead. The credit union organizations world-wide have been far more outspoken against FATCA than any banks I’ve heard of. The credit unions deserve and have earned your and our support. The banks haven’t.

In the interest of full disclosure: I’ve been a member of Alterna Savings credit union for about 40 years. I’ve not had money in any chartered bank during that time. But I’m not on any credit union board, never have been, have never worked for them, nor do any of my family have any of these possible connections, and my only connection with them other than my accounts is my sole $15 membership share.

Let the Canadian Bankers Association rot in Hell.  Never forget; never forgive. Je me souviendrai. (Sorry, I’d love to translate the rest of this post, but my French is nowhere near good enough without the result being an insult to my francophone friends and co-citizens.)

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About schubert

I've had a CLN (Certificate of Loss of Nationality of the United States) since 1976, quite by accident (DOS mailed me one after I wrote a long anti-US letter to Henry Kissinger on July 4, 1976, telling him I'd become a Canadian citizen several months earlier and why, then confirming on a form I got in the mail that I had done so willingly - duh! - and with the intent of relinquishing my US citizenship). I filed the CLN away and forgot about it until August 2011 when I first heard about FATCA and FBAR and realized I needed to find the proof I am not an American in spite of my birthplace. My wife, who came to Canada with her ex before I did and also became a Canadian citizen, believed she'd thereby lost her US citizenship but didn't write Kissinger, didn't know anything about CLNs or the need to get one (nor did I at the time), and applied for a relinquishment CLN a few months ago. Until August 29, 2012, we were waiting to get her CLN, and it has been in her interests that I'm monitoring and occasionally participating in this and the IBS website. However, joy of joys, wonder of wonders, my wife's CLN arrived in the mail on that date, so now we both have CLNs. I will continue to monitor and contribute to this website as I have time and when I think I have something constructive to add, but after 12 months of Hell we're going to get our sanity and lives back, and that means a prolonged vacation from anything related to CLNs, IRS, FATCA, or any other such crap, unless it rears its head and threatens Canada and Canadians to the point where I have to come out of my corner fighting again ...

23 thoughts on “It’s time for Canadian residents to close their bank accounts and move their money to a credit union.

  1. This morning, I opened an account and transferred a large sum of funds to Your Neighbourhood Credit Union, which is based in southwestern Ontario. YNCU recently began providing services in London Ontario after merging with Boomerang, (previously the credit union for municipal, provincial, school board, Labatt and GM employees).

    I made the decision due to the response I received from Libro, where I have been a member for 15 years (that response is posted in an earlier comment.)

    In contrast, here is the response I received from the Director of Compliance:

    Based on our current practices, we will be compliant and the burden will be low. There will be no Member impact. We already ask for a SIN & establish a Member’s tax residency at time of Membership, so no changes from the Member’s perspective.

    I followed up to confirm they would not ask for place of birth. Here is the response from Director of Risk Management:

    Good morning,

    We appreciate the opportunity to earn your business and are more than pleased to provide you with information with respect to your FATCA inquiry. Without implying that you are either an American citizen or born in the United States, I would like to confirm the status of FATCA in Canada which was the original question you asked. Your personal tax residency would not alter our response.

     The Canada Revenue Agency and the US Internal Revenue Service have had a tax treaty in place for an extended period of time. With the introduction of FATCA in the United States, governments around the world have revisited their tax treaties with the United States. Very recently, the Canada Revenue Agency and the US Internal Revenue Service have agreed upon an inter-governmental Agreement. With the nature of your questions, you can refer to the full Canada Revenue Agency Agreement here: http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/menu-eng.html

    When Your Neighbourhood Credit Union receives a new Membership Application we require the following information:

    • An original valid, unexpired government issued photo identification in one of the following forms:
      • 1. Canadian Driver’s License
      • 2. Ontario Photo Card
      • 3. Canadian Passport
      • 4. Canadian Record of Landing
      • 5. Canadian Permanent Resident Card
      • 6. Canadian Certification of Indian Status
      • 7. Canadian Birth Certificate
      • 8. Foreign Passport
      • Your physical address
      • Your mailing address (if different)
      • A contact telephone number
      • Your Social Insurance Number
      • Politically Exposed Foreign Person confirmation (whether you are a Political person with a foreign government, or directly related to one)
      • Confirmation that you are/are not operating the account(s) at the instruction of any third party
      • The intended use of the account(s) being opened.
      • The purchase of a $10 share, which grants  Membership in the Credit Union and a vote as a Credit Union Member.

    I gave them my driver’s license and my SIN. Within minutes, funds were transferred via electronic transfer from Libro to Your Neighburhood. When my RRSPs are up for renewal at Libro, I will transfer those as well. I will also begin transferring funds from TD Canada Trust to Your Neighbourhood.

    I was especially pleased to learn Your Neighbourhood plans a second branch in London and plans to open a call centre here, so they are supporting my community.

    Their annual general meetings are held in Kitchener, but they charter buses for members who live in other communities to attend.

    YNCU website has no information on FATCA–unlike the information Badger posted from Meridean.

     

     

     

     

     

     

  2. Thanks Badger.  I just picked that up from an e-mail someone sent to me.

    Thanks Badger. I just picked up that information from an e-mail someone sent to me.  Note, Meridian is Ontario’s largest credit union.

    Meridian says:

    Our Members know that we have their backs.

    Yep. As in stab in the back!

    Meridian claims:

    We get to know our Members so that we can proactively advise them on ways to save money, how to invest for the future and what financial solutions are in their best interest.

    But, do they know where their customers were born?  Will they ask where customers were born?  CRA says financial institutions are not required to ask for place of birth.  But, that is very different from financial institutions deciding they will ask for place of birth.

  3. I recently opened an account at a small credit union (2 branches total in two smaller Ontario adjacent cities, less than 175M assets) – I was asked a lot of questions, including:
    - was I was related to any foreign state diplomats, judges etc.? (a check against foreign money laundering)
    - the reason for opening the account (the lower fees! community support!)
    - but nothing about place of birth

    I needed to show 3 pieces of ID – used my SIN, DL and Ontario health card

    I asked (explaining that I was new to credit unions) “doesn’t one have to be a resident of Ontario to open an account here?” I expected the answer to be yes but the answer was “no, but you have to be a Canadian citizen”.

    I was never asked directly if I actually am a Canadian citizen – it was just assumed that I was. Anyway, there were no problems opening the account and the service has been great.

  4. FWIW and to help allay fears concerning credit unions, at least for now:

    Today I visited my credit union in Ottawa (Alterna Savings) to alert them to the fact that I’ll be in Europe for two weeks this summer and will be using my ATM card to withdraw cash while over there. I had just had difficulty using a credit card to purchase a rail pass online, because the rather large charge went to the company from a European web address and triggered alarm bells. I called the credit card company (and the other one I deal with) to alert them to European charges that will be coming through from X to Y this summer, then thought I’d better do the same for my ATM card at the credit union (works on Interac/Cirrus networks worldwide for getting money out of my chequing account).

    No line up, very quiet in the credit union. The nice younger man was not busy, took my request, scanned my card, looked at the computer screen and said “we’re updating and verifying our clients’ accounts, I need to check something with you, OK?” Oh oh, I thought, here it comes … He then asked me to verify my home address, which was correct. He then scanned the screen some more and said, OK that’s it, thanks. (I know they have me down as Canadian, which I am, and not as anything else, which I’m definitely not,since I recently had a chance to view my account on their screen over a shoulder of someone who wasn’t looking as I did that, but there was no further probing at all.)

    So, take it one step at a time, keep your cool, don’t raise flags by leading with your chin (good advice from Anne Frank on my latest Brock thread on the proposed opposition amendment to the enabling legislation, don’t answer questions they haven’t asked). So far I’m not seeing any problems for anyone, though of course it’s still early days.

  5. The following is a reply I received from Vancity credit union which may interest others trying to deal with FATCA:

    From
    Vancity
    Date 4/01/2014 08:54:54
    Subject of Message
    FATCA Inquiry [T20140401002LS010Z360255]
    Dear Ms. XXXXX,
    Thank you for your patience in waiting for a reply from us regarding your FATCA inquiry.
    Here is the reply from our Chief Privacy Officer:
    Vancity is currently reviewing its processes to determine whether it can qualify under the reduced FATCA reporting obligations. We are fully aware of the exemptions and reduced burden on our members and we will make every attempt to mitigate the impact on our membership.

    Please contact us again if you have any further questions. Alternatively our Member Services Centre is open 7 days a week to assist you Monday to Saturday 8am – 8pm and Sunday 10am – 5:30pm PST.
    Sincerely,
    Lindsay
    Member Service Specialist
    Vancity

    I keep a couple of accounts open with Vancity and will continue to monitor the situation. They seem much better than the big banks. I have closed accounts with TD and RBC. Yesterday I opened an account with a small credit union with low total assets. There was no mention of FATCA and no questions as to place of birth. In the meantime my financial divorce with the US government and IRS is proceeding towards getting a CLN.

  6. @Blaze
    @ArticGrayling

    I am still in communication with my local credit union trying to get an answer to my question. It has been referred from one person to another. They have not yet clarified whether or not Vancity will qualify for reduced FATCA reporting regulations.

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