What is FATCA and why should it matter to me?

The CrowdJustice Team

posted on 06 Sep 2019

A CrowdJustice case owner, Jenny, is bringing a case against HMRC over FATCA. Jenny is a US born British citizen and this law requires banks to send all her personal and financial information to US authorities on an annual basis.

But just what is FATCA, how did it come about and why should it matter to you? 

What is FATCA?

  • In 2010, the US introduced a law called the Foreign Account Tax Compliance Act, FATCA, that requires foreign banks to report on any US citizen to the IRS, including Americans living in the UK, dual-citizens and US-born British citizens. FATCA was extended to the UK in 2012.
  • FATCA was introduced following banking scandals involving rich Americans hiding money in offshore bank accounts.
  • FATCA operates without exceptions: I do not have offshore accounts and am not rich. Any US citizen, including "Accidental Americans" (foreign citizens who were born in the US and have left the US as young children) and other US-born British citizens, like me, are subject to FATCA reporting, independent of any actual US tax liability. All it takes is for an American citizen to have a bank account 'offshore' which, in the case of the 9 million US citizens living abroad, is likely to mean a local bank account.

"FATCA’s intrusiveness raises serious privacy issues"

Data Protection – a fundamental human right

  • Despite the European data protection authorities raising serious concerns about compatibility with European laws, the Government ignored them and HMRC signed the treaty that extended FATCA to the UK.

Common Reporting Standard and Beneficial Ownership registers

  • In 2017 the EU copied FATCA by rolling out the Common Reporting Standard (CRS) – once again against the advice of European data protection authorities. Notwithstanding the advice, the EU is now going one step further, with the publication of people's personal details in open registers of "beneficial ownership".

Useful links