February 6, 2014 Update: Yesterday Canada’s Finance Minister announced Canada has signed a FATCA Intergovernmental Agreement with the United States. That may or may not change some of the information provided here. We will update as we learn more about what this may mean.
February 10, 2014 Update: Canada Revenue Agency has released some information on FATCA.  Again, we don’t know exactly what this will mean, but this information could be  important:

Will my financial institution be asking me if I was born in the U.S.?
A financial institution complying with the agreement will not be required to ask its account holders about their place of birth.If a financial institution, applying the due diligence rules of the agreement to its accounts, discovers any records connected to the account that have an unambiguous indication of a U.S. place of birth, the financial institution may treat the account as a reportable account or follow up with the account holder to obtain documentation that shows the account holder is not a U.S. resident or U.S. citizen.
Does the agreement require Canadian financial institutions to report to the CRA on any individuals who were told that they relinquished their U.S. citizenship when they became Canadian citizens?
The agreement does not require Canadian financial institutions to report on any individuals who have relinquished their U.S. citizenship and are not residents of the U.S.

Most of our banks won’t have an “unambiguous U.S. place of birth in their records because they were not able to ask that question when we opened accounts with them.
ORIGINAL POST FOLLOWS:
Can a bank refuse to open an account for me because I was born in the United States? Can a Canadian bank close my long-standing account because I won’t tell them where I was born or I won’t give consent for my very personal banking information to be sent to IRS?
Do I have to keep my life savings in a piggy bank to keep it safe from the United States?
Those are common questions we all have had since FATCA attacked our responsible, honest lives. Many of us have been customers at the same bank for years or decades. In some cases, staff who have known us all that time are aware of our U.S. connection. In other cases, they are not aware of it.
I am not a lawyer or banker and this information is not intended as legal or professional advice. It is simply some of the pieces of the puzzle which I have learned over the past two year.
The first thing to do is take a deep breath. Let it out slowly. Calm yourself.
In Canada, we have had no reports of a Canadian bank closing or refusing to open an account for anyone because of birthplace. That puts us far ahead of our friends in many other countries around the world.
The next thing to do is to know your rights under Canadian banking, privacy and human rights laws. This post will focus on Access to Basic Banking Services.
These regulations are complex. However, their meaning is communicated in easy-to-understand language from the Canadian Bankers Association. Yes, that’s the same organization that is insisting it must comply with FATCA.
But, check it out. To open an account, you must present two pieces of identification. These can include:

Canadian birth certificate, a Canadian driver’s license, your Canadian Social Insurance Number, Canadian citizenship certificate, Canadian permanent resident card, Canadian passport, Canadian old age security card, etc.

Did you notice only a Canadian birth certificate can be used to open an account in Canada? A foreign birth certificate cannot be used!  That is hugely significant–and makes Canada different from many countries around the world which require a birth certificate for opening an account.
Except for a Canadian passport, there is nothing on that list that reveals your place of birth. So, the solution is clear. Don’t use a Canadian passport with a US place of birth  opening an account. Use the other pieces of ID.
Children born in Canada to parents born in United States will, of course, have a Canadian birth certificate, so there should be no way for the bank to know if they may be considered to be “US persons.” For them, presenting that Canadian birth certificate may be their best protection.
The bank does have the right to know your date of birth. This is very different from knowing your place of birth. A driver’s license, citizenship certificate, permanent resident card and Old Age Security card all contain this information–but not place of birth. You are also required to provide your address and occupation–unless you are homeless or unemployed.
So, again, you are under no obligation to tell your bank where you were born to open an account. If they ask, just stick to the information they are entitled to know.
According to CBA, a bank can refuse to open an account if:

You plan to use it for illegal or fraudulent purposes; You have a history of fraudulent activity in financial services within the past seven years; You knowingly made false statements to open the account; You would subject other customers or employees to physical harm, harassment or abuse; You refuse to consent to verification of identification used to open the account.
 

Again, I don’t see anything there that says they can refuse an account if you refuse to tell them where you were born.
The bank is required to obtain your SIN for accounts that provide income so that income can be reported to CRA. You are not required to provide SIN for non-income accounts.
So, can a bank close an account if you refuse to tell them if you might be considered to be a “US person” or refuse to give consent for information to be transmitted to IRS?
Access to Basic Banking Services does not specifically address the issue of closing accounts. However, in a letter to US Treasury and IRS, TD Vice-President said (page 3):

If an FFI closed an account because such information was not provided,  the purpose of ABBS would be frustrated, and in addition, the FFI would subject to fines. Each violation of the ABBS requirements would subject the financial institution to a penalty of up to $200,000.
Even if an FFI could close an account of an uncooperative account holder, an FFI could not refuse to reopen an account for such individual if adequate identification under ABBS were again provided.

Despite all of that, Canadian Bankers Association FATCA Information for Clients says:

The majority of Canadians are not U.S. persons and, in most cases, FATCA will have little impact. If you have an existing account and there is an indication that you may be a U.S. person, or if you are opening a new account, your financial institution may ask you to provide additional information or documentation to demonstrate that you are not a U.S. person.
If you choose not to provide this additional documentation upon request, at a minimum, your financial institution may be required to withhold a tax of 30% on U.S. source paymentsthat you receive and send this money to the IRS. Also, your financial institution may refuse to open an account or may be required to close existing accounts.

CBA is sending mixed messages on its own website. It’s important we stand up to the banks and ensure that the rights CBA outlines in Access to Basic Banking Services are not compromised by their statement on FATCA. It’s also important we remain vigilant to ensure the government does not change those laws.
It’s also important to note this information applies to basic banking services only. Investment accounts are treated differently and some people have already been asked by investment arms of banks or by investment firms the “US person” question. I do not know the legalities of this or if anyone has challenged it.
In addition, credit unions fall under provincial jurisdiction, so they are regulated by the provinces and territories.
NOTE: The author is not a lawyer. Information on this page is not legal advice and should not be relied upon as such. If you believe you might have issues with US or any other legal authorities you should contact an attorney