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.)

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

  1. @Schubert
    The CUCC notice actually refers to an official CRA draft guidance document of over 140 pages also available on the CUCC site, but indirectly. You have to type “CRA draft guidance” in the search box at the top of the page.

  2. Not all credit unions will be exempt from FATCA. Here is a reply I just received from a question I sent to mine:

    Libro is a full service financial institution and our owners come from a wide variety of backgrounds and many operate a wide variety of business and social enterprises.   A great many have dealings with companies and counterparts around the world and significant relationships with US firms, customers, suppliers, etc.    Being open to everyone in the communities that comprise southwestern Ontario, we have many owners who are local Canadian residents but also, as defined by US FATCA legislation, “US persons” by way of citizenship or otherwise.
    Thus, Libro is not structured to declare itself unilaterally as a “Non-Reporting” or “Deemed Compliant” financial institution.   However, along with our provincial and national level credit union system organizations (Central 1 Credit Union and Credit Union Central of Canada), we are working our way through the recently announced Inter Government Agreement between Canada and the US regarding FATCA and developing the procedures and protocols that will be required for reporting through the Canada Revenue Agency in compliance with what will now be domestic Canadian legislation and regulation.    That will include the protections for consumers and individuals as provided by the federal Personal Information Protection and Electronic Documents Act (PIPEDA).
    Much has been said about FATCA’s extra-territorial reach beyond the US and implications for the sovereignty of Canada and other countries.  Many of us at Libro certainly have our own personal opinions on that issue but, as an organization, we must do what is necessary to continue to provide quality financial service to our owners in a manner consistent and compliant with the laws of Canada and Ontario.
    Ms. Swanson, I am not sure whether your interest in FATCA is a general concern or if FATCA compliance will directly impact you or someone close to you.  I would be happy to talk with you further on this and, if appropriate and at your request, refer you to other Libro staff or other professionals (example: accountants with specific expertise in US taxation) for advice on your particular circumstances.
    Let me know if I have answered your question to your satisfaction and please do contact me if you wish to discuss this further.

    Libro is Ontario’s second largest credit union and the eighth largest in Canada. It is ironic that a credit union that was established over 60 years ago for Dutch immigrants who could not get financial services is now preparing to discriminate against another group of Canadian immigrants (most of whom are citizens).
    I replied:

    You have answered my question. I will be transferring a large sum of my money out of Libro soon.
    This is a huge disappointment to me.  I feel betrayed by the government of the country where I have been a patriotic citizen for 41 years. Now I feel betrayed by the credit union where I have been a loyal “owner” for 14 years.

  3. Thank you Blaze for the very interesting information from your credit union, Libro. We can’t be too careful. I live across the country in the Vancouver area and just contacted my credit union, Vancity, through an online inquiry. To their credit, Vancity put out a statement on FATCA and have expressed opposition. However, they will comply. I asked them to clarify whether the credit union qualifies for reduced reporting obligations. This would mean that they will not be required to report accounts of members who live in Canada. I will post the answer when I receive it. This will help determine where I do banking in the near future. Here is the link to Vancity’s statement:

  4. The CRA will never have to give any info to the Southerners. FATCA will be repealed before the congress will allow reciprocity. Under the terms of the IGA, CRA does nothing until reciprocity is operable .
    The whole thing is a waste of time and money. Less profit for the banks ( boo hoo). Not less pay for the CEOs though.
    You heard it here first.

  5. Careless typo on my part.
    CRA is not reporting until there is reciprocity.
    I forgot to put it in the negative NOT.

  6. Thanks KalC. I had not read the IGA in any great detail and was unaware of that feature in it. I was not able to read your link until this morning because I only saw it on my iPhone. I was not at home, and it is much more convenient to read it on my iPad.
    So are we now satisfied that FATCA is more of a paper tiger than we thought? Maybe Flaherty didn’t sell out as badly as we thought? Does the clause you have provided us there represent true reciprocity? Maybe, but I am not really sure.
    If it does, and assuming that CRA will withhold information until reciprocity is in place (and we can be fairly certain that Americans won’t agree to that), I can foresee that some might eventually regret renouncing/relinquishing US citizenship. I can assure all that I would not be one of them. Other than my birth certificate, I have absolutely no ties to the country. I am sure that for many, dumping their citizenship was an emotionally difficult business. For me, it most certainly was not. The US treasury would be unable to print enough money or borrow enough money from China to bribe me to take it back.
    Don’t misunderstand me here. I think the challenge has to proceed. Americans in their extra-territorial arrogance need to be taken to task. Our government in yielding in any way to such extra-territorial demands also needs to be taken to task. The relative silence of Canada’s compliant media annoys me to no end.
    I am heartened by the resolution of the Republicans to abolish FATCA (see link in my previous posting). For this to happen, at a minimum the GOP must take control of the Senate. They must also maintain the control they have over the House. However, even if this happens, Obama would still have the power to veto such a change. Only a two thirds majority in congress could overrule a veto. That last part is what worries me.
    If a repeal of FATCA happens, it would bring to mind what Churchill said about the Americans. I don’t recall his exact words, but they were something like “you can always depend on the Americans doing the right thing, but only after they have tried everything else”.
    I am encouraged that one side of the American political landscape has come to their senses, but I am still not holding my breath. We need to keep our powder dry and proceed with the challenge.

  7. @all
    IGA Article 4, Part 6 does NOT put obligations of full reciprocity on the US. Any claim that it does comes from mis-reading….
    “6. Coordination of Timing.
    Notwithstanding paragraphs 3 and 5 of Article 3 of this Agreement:
    a) Canada shall not be obligated to obtain and exchange information with respect to a calendar year that is prior to the calendar year with respect to which similar information is required to be reported to the IRS by participating FFIs pursuant to relevant U.S. Treasury Regulations;
    b) Canada shall not be obligated to begin exchanging information prior to the date by which participating FFIs are required to report similar information to the IRS under relevant U.S. Treasury Regulations;
    c) the United States shall not be obligated to obtain and exchange information with respect to a calendar year that is prior to the first calendar year with respect to which Canada is required to obtain and exchange information; and
    d) the United States shall not be obligated to begin exchanging information prior to the date by which Canada is required to begin exchanging information.”

  8. @ Shovel….
    I might be misreading something (I am not a lawyer), but as I read it, there is a two way street because all 4 conditions are connected by the word “and” rather than “or”. In other words, neither side is obligated. All 4 conditions must be met. The first two apply to Canada and the second two apply to the United States.
    It looks to me like neither side is obligated until there is reciprocity.
    Are there any lawyers in this forum? I would be interested to know what they think of this.
    In any case, our banks can agree to the American request that they ask for US indicia, but as I see it, our constitution relieves the individual from having to answer it truthfully.

  9. @ArcticGrayling
    O.K., let’s say timing is nailed down by the IGA. Does that mean the information obligations match? No. That’s where there isn’t full reciprocity. The information the US must send under the IGA amounts to just about nothing. And it’s easy for the US to send the CRA just about nothing.
    The point is, don’t look to reciprocal timing in an IGA to kill FATCA.

  10. Please see below my question to Vancity Credit Union and their carefully measured response:
    Message: [This inquiry is in regard to FATCA ( US Foreign Accounts Tax Compliance Act). I appreciate that Vancity has made a statement on this issue. My question is… will Vancity be qualified for reduced reporting obligations under FATCA compliance procedures? Credit unions which hold less than two percent of their deposits for non-residents of Canada should qualify for this. There is no requirement to report accounts of members who reside in Canada. Thank you.]
    Do you require a response?: [Yes]
    3/26/2014 09:00:54
    Subject of Message
    RE: Contact Us Form – Miscellaneous [T20140325003TS010Z358224
    Dear Ms.XXXXX,
    Thank you for contacting Vancity regarding FATCA.
    I believe that you are asking a very good question. I will forward this to our designated spokesperson who is diligently waiting for updates about FATCA. I will let you know as soon as I hear from her.
    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.
    Member Service Specialist
    Tel: 604-877-7000
    Toll Free: 1-888-VANCI
    Fax: 604-877-7999
    I looked into a small credit union in my area which would be totally exempt from FATCA due to low total assets but their investment options are very limited. I will wait and see what Vancity has to say about this. This may be a case of discrimination as far as limited banking options due to nationality/ country of origin for Canadian Citizens. In other words, my banking options may be limited and I may be treated differently because I was born in the United States.

  11. @ shovel….
    You are probably right. We can probably suppose that Americans are excused from obligations based on their own domestic laws.
    We have our laws too, and our supreme law is the constitution. Whether the Americans like it or not, our constitution puts fewer requirements on us.
    And then there is article 6.1 where the United States undertakes to achieve reciprocity. Could we not refuse to give them information on the basis of them not living up to article 6.1?

  12. @ patcanadian…..
    As others have pointed out, any question that asks about your US indicia should be answered N/A, which they can interpret to mean what they want, but which for you would mean “not answering”.
    It could also mean “not applicable”.
    Under our constitution, you can answer it that way. Under our constitution, the question does not apply.

  13. Anecdotally, I am seeing more and more evidence of financial institutions turning a blind eye and a deaf ear to US indicia. Just last night I was talking to a friend in Canada who had that experience with his bank. He lives in a place where there are a lot of ex pats, and he told me his bank manager didn’t ask him if had had US indicia.
    Off the record, the bank manager knew that this fellow was born in the States. This friend of mine is a Canadian citizen.
    The bank manager only wanted to know if he is legally resident in Canada.
    Somebody else in another posting suggested that Flaherty, off the record, expects financial institutions to react that way.
    Are there others here with experience to pass on?

  14. @Blaze
    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.

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

  16. 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.

  17. 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.

  18. 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.

  19. 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:
    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.

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