updated 6:35 PM CET, Mar 21, 2019

European Banking Federation in complaint about FATCA enforcement burden

The head of the Brussels-based European Banking Federation, which represents some 3,500 banks across Europe, has warned U.S. Treasury officials that American expats may continue to struggle to get and keep bank accounts if something isn't done to address the problems his organization's members still face in their efforts to implement the American tax evasion law known as FATCA.

In a letter dated Feb.22, EBF chief executive Wim Mijs cited the difficulty Europe's banks are having in particular with accommodating so-called “accidental Americans,” who are considered to be American because they were born there, typically years ago, or have at least one American parent, but who have grown up and reside in Europe, and are legal citizens of one of the EU’s 28 member states. Such Americans, he said, typically lack and struggle to obtain  a so-called U.S. Tax Information Number (TIN), without which FATCA compliance is impossible.

Noting that the matter had been “the subject of several previous letters,” Mijs explained that the 2010 U.S. law formally known as the Foreign Account Tax Compliance Act had placed Europe’s banks in a dilemma.

They’re having to choose, he said, between “[continuing] to provide financial services, including basic banking services” to these European citizens who are also U.S. citizens, but who lack a TIN  – “or stop doing so." 

'Accidental Americans'

Wim Mijs EBF cropped

The problem for Europe’s banks with respect to “accidental Americans,” Mijs, pictured left, explained to the American officials in his letter, is that these Americans are theoretically entitled, by law, to be able to open and maintain bank accounts in the EU, because they are EU citizens.

Yet because they American, under FATCA and its subsequent Inter-Governmental Agreements with individual European states, their banks are obliged to provide the IRS with information on their European bank accounts, or face significant financial penalties. 

And because many of these individuals left the U.S. as long as 50 years ago “and never went back, or they were only born in the U.S. and stayed for a few months /weeks only….[they] do not have a TIN, and encounter difficulties and long delays in obtaining one, only to renounce U.S. citizenship subsequently,” Mijs went on.

The U.S. Treasury agreed to relax its requirements involving TINs temporarily, but this grace period is set to end on 31 December.

“A permanent solution to address the issue of the ‘U.S. reportable accounts without U.S. TINs” Mijs continued, is therefore required, given “[the] possible huge sanctions that European banks may incur if considered [FATCA] non-compliant.”

If no solution is found, Mijs warned that Europe’s banks will likely be forced to terminate existing contracts with customers who are unable or unwilling to provide a U.S. TIN, “[which] in turn will lead to financial exclusion, and impede access to [banking services] for a very significant number of European (dual) citizens.”

Mijs’s letter was addressed to assistant secretary for tax policy at the Treasury, David J. Kautter; assistant secretary for international markets at the Treasury, Heath P. Tarbert; deputy assistant secretary for international tax affairs at the Treasury, Lafayette G. “Chip” Harter; and IRS acting chief counsel William M. Paul.

The letter was copied to four other officials, including deputy International tax counsel at the Treasury Douglas Poms, the U.S. Treasury’s European representative Lawrence D. Norton; and two officials with the European Commission’s DG FISMA, its deputy director-general John Berrigan and its head of international affairs, Almoró Rubin de Cervin.

The non-profit EBF ws founded in 1960, and calls itself "the voice of the European banking sector," as it represents 32 national banking associations across Europe, which together employ around 2 million people. 

Accidental Americans Association: ‘Good news’

Fabien Lehagre finalNews of Mijs's letter was welcomed by Fabien Lehagre, president and founder of the Association des Américains Accidentels (Association of Accidental Americans, or AAA), who has been leading the accidental Americans’ cause for fairer treatment by the U.S. across Europe.

“This is good news for Europe’s accidentals,” Lehagre, pictured left, said.

“We hope that the U.S. Treasury will now work to find a permanent solution quickly.

“It seems that Europe’s banks and it’s accidental Americans have a common interest in seeing this matter resolved.”

Estimated 300,000 'accidentals' in EU 

Although even the U.S. government admits to not knowing exactly how many Americans live outside of the U.S., the latest estimates have been in the neighbourhood of 9 million – significantly more than previously believed, even as recently as three or four years ago.

Even less well known is how many of these are “accidentals”. Lehagre says there are believed to be as many as 300,000 across the EU, based on European Parliament data.

As reported, the European Parliament in July voted unanimously to approve a resolution supporting the cause of Europe's accidental Americans.

The 470-to-43 vote, with 26 abstentions, had been brought about by Sweden’s Cecilia Wikstrôm, on behalf of the E.U. body’s petitions committee. Among other things the resolution calls on EU member states as well as the European Commission to re-open negotiations with the U.S. over FATCA.

The non-profit EBF ws founded in 1960, and calls itself "the voice of the European banking sector," as it represents 32 national banking associations across Europe, which together employ around 2 million people. 

To read Mijs’s letter on the website of the European Banking Federation, click here.