FATCA hearing: Europe's 'accidentals' unleash frustration over official EU 'ignoring' of their struggles

Dutch European Parliamentarian Sophie in 't Veld, a crusader for so-called "accidental Americans" in her constituency in recent years, also singled out for criticism "the member states [of the European Union] – and of course, when I say “member states”, I clearly make an exception for France and the Netherlands, which have been very actively standing up for citizens rights here".

In 't Veld, who wasn't one of the official speakers at the hearing but who spoke passionately during one of two Q-and-A sessions, then went on to draw applause from the room when she referred in passing to how "the European Commission and most of the [EU] member state governments put transatlantic relations over the interests of EU citizens". 

Officials from the European Commission were also among those testifying, and largely defended the EU's policy with respect to FATCA thus far. They included a representative of the European Data Protection Board, which is being called on by the accidental Americans to do more to stand up to the U.S. over its demands for their personal data, as required by FATCA, formally known as the Foreign Account Tax Compliance Act, as well as a representative of the European Commission's Directorate-General for Justice and Consumers.

FATCA was aimed at cracking down on Americans who made use of overseas bank accounts to hide their wealth from the U.S. tax authorities, but because it relies on non-U.S. banks and financial institutions to provide the data on those of their account-holders who are "U.S. persons" – and because this includes anyone who was born in the U.S., even if they lived their entire lives elsewhere, and in some cases, were even born abroad, to an American parent – it has shone a spotlight on tens of thousands of individuals who have never considered themselves to be American, and who therefore have not been in the U.S. tax system, as they are taxpayers and citizens of other countries. 

As reported, the hearing on "FATCA and its extraterritorial impact on EU citizens" was held by the European Parliament's Petitions Committee (PETI), and is officially the latest in a series of actions that have taken place in response to a petition filed with the European Parliament in 2016 by someone who has officially been referred to until now only as "Mr J.R. (French)."

This petitioner, who is a resident of France, kicked off the hearing with a 10-minute initial statement that detailed what he said had been the European Commission's "ignor[ing of] the issues" he and other EU citizens who happened to have been born in the U.S. struggle with.

"Since I submitted the petition in 2016, we’ve been relentlessly trying to get official positions from the European executive on these issues – whether it’s the Commission, or whether it’s the European data privacy watchdogs, the Working Party Article 29 – now replaced by the European Data Privacy Board," J.R. said.

"Over the course of 2016, 2017, I sent multiple emails and letters in relation to my petition. They were all ignored. Copiously ignored.

"I then had to go to the extent of filing a complaint with the EU ombudsman, to try and get the EU watchdog authorities to give me an official position on FATCA and its compatibility with EU data privacy norms. And on the 8th of February, 2019, I finally managed to get an official response from the Working Party Article 29 – so we’re talking, you know, three years later.

And fundamentally, that response totally side-stepped the matter. They refused to actualy look into the legality of FATCA, and its compliance with European data norms."

Even after the EU General Data Protection Regulation came into force, the petitioner known as J.R. noted, and a report on the matter commissioned and presented, nothing had happened, not even after a resolution supportive of Europe's accidental Americans and their struggles was unanimously approved by the European Parliament. 

'40,000 EU bank accounts at risk'

Other speakers included Fabien Lehagre, the president of the Association des Americans Accidentels (Accidental Americans Association), pictured left during the hearing, who raised what is for many accidental Americans in Europe  is a pressing issue right now: the fact that an existing moratorium on a FATCA requirement for banks to provide the U.S. Social Security numbers of all of their American account-holders comes to an end at the end of this year. 

Because the penalties for failing to comply with this requirement, from the banks' point of view, are severe, EU banks have been warning their American account-holders in no uncertain terms recently of their need to comply, or else risk having their accounts closed down.   

Lehagre cited a letter sent earlier this year by the president of the French Banking Federation in which he estimated that Europe's banks could end up closing as many as 40,000 accounts as a result of these rules, even though, he noted, the IRS had recently pointed out that banks actually have time before they would face sanctions. 

Filippo Noseda, a partner with London law firm Mishcon de Reya, who – as reported – is representing a British and American dual national known as "Jenny" who is crowd-funding a legal case in the UK against HM Revenue & Customs, for what she claims is the mis-use of her personal data in connection with her banks' compliance with FATCA, spoke next, detailing what he said was a major change in the attitude of European Commission officials with respect to FATCA between around 2011 and the present.   

After initially regarding it with concern, he said, "unfortunately it seems to us that a number of European bodies turned a blind eye" to FATCA's potential problems. 

He showed a series of slides of correspodence from as far back as 2011 that he claimed proved his point. One of these was a letter "written to an accidental American" in June of 2011 from the office of the then-European Commissioner for Taxation and Customs Union, Audit and Anti-Fraud in 2011, in which it was acknowledged that "certain aspects of FATCA...are raising concerns within the EU", including "possible issues of conflict with EU and Member States' law, in particular those on data protection".

"The letter ended," Noseda noted – pointing out again that it had been written "eight years ago" – with the observation that the European Commission at the time had been hoping that it would eventually be possible to find a way to make the FATCA legislation "more proportionate and workable". 

This, he went on, was effectively an admission at the time that the European Commission viewed FATCA as "not proportionate".

To see the entire broadcast on the European Parliament's website, click here.  To read an unabridged transcript of the comments made by 'Mr. J.R. [Petitioner]' before Tuesday's hearing on 'FATCA and its extraterritorial impact', the latest official response to his petition of 2016, click the green "Next" box (below right).

Below are the introductory remarks, in full, of J. R., a so-called "accidental American" whose 2016 petition
ultimately led to Tuesday's European Parliament Petitions Committee Hearing, where he delivered them

By J. R. (French), petitioner  

I thought it would be helpful, as there are a lot of new faces, a lot of familiar faces, here today, to just give you an abridged history of my petition, which has been running for just shy of five years now. And a quick history of events. So everybody’s fully aware of what’s going on, what’s happening and what isn’t happening, as it were.

And a little bit of the response of the European executive bodies.

I submitted the petition on the first of September 2016; the petition was pre-GDPR. And one of the fundamental matters of the GDPR is how FATCA, a piece of U.S. legislation, breaches European norms, and in particular, data privacy rights in the EU.

One of the key points in the petition is “proportionality”. I won’t take people through the petition again, but fundamentally, what we demonstrated, I think very eloquently, was that this bulk transfer of information from the European Union, regarding European citizens, to America, where there’s no notion of any form of impropriety – just does not satisfy the requirements of proportionality.

And is probably – and arguably therefore – invalid under EU laws.

And this is pre-GDPR. The GDPR petition only serves to reinforce that message.

Since I submitted the petition in 2016, however, we’ve been relentlessly trying to get official positions from the European Executive on these issues – whether it’s the Commission, or whether it’s the European data privacy watchdogs, the Working Party Article 29 – now replaced by the European Data Privacy Board.

And so. Over the course of 2016, 2017, I sent multiple emails, letters, in relation to my petition. They were all ignored. Copiously ignored.

I then had to go to the extent of filing a complaint with the EU ombudsman, to try and get the EU watchdog authorities to give me an official position on FATCA and its compatibility with EU data privacy norms.

And on the 8th of February , 2019, I finally managed to get an official response from the Working Party Article 29 – so we’re talking, you know, three years later. And fundamentally, that response totally side-stepped the matter.

They refused to actualy look into the legality of FATCA, and its compliance with European data norms.

And so, GDPR then came into force; thanks to this PETI Commission, and the work of the European Parliamentarians present today, a report was commissioned [to be carried out] by Professor Garbarino, a leading scholar in these issues. And he highlighted multiple infringements of GDPR resulting from FATCA.

I sent all this information on to the now-reformed Working Party Article 29, which has now become the “European Data Privacy Board” – trying to get, again, their response. And I produce their email back to me.

So in 2018, this was the response of the European Data Privacy Board:

“Dear Mr. [JR]. [FATCA] is an ongoing project and no decision was reached by the Members of the Board, we cannot comment further at this stage. We also cannot say at this point when a decision will be reached. Thank you for your understanding. Kind regards, EDPB”

So I’ll just leave that, in terms of the position of the EU watchdogs.

This absolutely fundamental point of compatibility with EU data privacy norms is just not being looked at.

And I know the European Data Privacy Board is present here today, so hopefully they may be in a position to enlighten us a little bit further.

I would say that this position is only compounded by the resolution that was voted by the European Parliament in favour of “accidentals”, and in that resolution, the Parliament asked the EDPB to hold an investigation into the GDPR issue, but that has simply not happened.

The second limb of our petition, I suppose, is more as regards the position of other executive bodies, and the European Commission in particular.

And so, the commission has come to all the hearings that have been held, thanks to PETI, on this subject; and we’ve seen, basically, a systematic stone-walling of all our requests, and all our attempts to actually have the issues that we’re raising properly looked at, the commission has sent junior members of staff; the commission has hidden behind easy arguments over a lack of data, just to avoid, effectively, looking into the real issues.

And I’m going to take a little aside here. One of the things I think is very important for the commission to note today is that we have 25 people here today – 25 accidental Americans – who’ve come on their own time, with their own money: From Belgium, from Ireland, from Austria, from Holland, from France, from the UK; and I’m probably forgetting some countries. So this is a real issue. These people exist. They are here, physically present, here today.

And so the commission has ignored the issues.

I can surmise why the commission might be doing this; it might be driven by political factors; it could be a reluctance to stand up to the U.S. and actually assert European norms; and the rights of European citizens; it could be for political gain; it could be this notion that if you bring down FATCA, you bring down CRS, the Common Reporting Standard, and that FATCA is ultimately good because it’s gonna solve budgetary issues by fighting [to ensure] international tax compliance.

But the underlying point of all this is that an executive should not overlook breaches of European rights and infringements on the rights of EU citizens for political gain.

That point must be understood and must be acknowledged.

I find personally that the position of the commission – and I will speak my mind here, because I’ve been coming here for four years now, and nothing’s happened – is callous and short-sighted.

It’s callous because you are ignoring your citizens, and you are turning a blind eye to the breaches – flagrant breaches – of EU norms, and it’s short-sighted because fundamentally, what you are doing is damanging the European project.

I am a fundamentally European citizen. I am half French, half Irish. Every Saturday morning I take my kids to tennis, and I walk them down Boulevard Flandrin, where Jean Monnet, from 1955 to 1975, built this project.

By ignoring your citizens, by turning a blind eye to them for political gain, you are damaging the European project. And I say that as passionate European citizen.

I’m very pleased to see that there is a very strong lively European Parliament, that is standing up for us, and is listening to us. And this is important to me – because the commission is not listening to us, myself as a petitioner, but the 25 people that are here as well – but equally, it’s not listening to the European Parliament.

In Resolution 2018-2646, the European Parliament asked the Commission to do various things, and none of those things have happened.

The commission has not investigated the issues represented by FATCA.

The Commission has not spoken to us.

It has done nothing.

And it’ll probably come here today and say, “it’s a U.S. issue, we can’t do anything about this”. We shall see. I hope I’m wrong.

The last bit I wanted to do, was to show, on a slightly more positive note, what can happen when an executive wakes up and does something.

And we have some very very interesting recent illustrations of what can happen (see slide, below).

But we have strong political action in France – I can see Monsieur le depute Le Fur is present today, and St Martin. They’ve done an incredible job of moving things in France.

Similarly in the Senate in France, Jacky Deromedi had a resolution passed.

France is moving things forward and showing that things can happen.

Equally impressive is what’s happened in Holland. Menno Snel, the minister of finance, went to America. What happened when Mr Snel went to Washington? The Americans acknowledged the existence of accidentals; and the IRS, even, very shortly thereafter, came up with a partial amnesty for [some of these] Americans.

It’s not perfect, and it’s not the solution that we want, but it shows to the commission, that when you act, the Americans are aware, listen, and respond.

So this hand-wringing is just too easy, and cannot be accepted.

We also know that domestic [European] politicians are waking up. [One of them is] Preet Kaur Gill, the UK MP, who was invited today, and couldn’t attend, unfortunately. But we know these people are listening and that basically, there is a groundswell: There are lots of domestic politicians wishing to act.

It’s now really just up to the Commission to pick up the baton, accept to do its job, protect its citizens, protect EU norms.

And that’s really what I want to finish with: A reflection on the separation of powers, if you will.

We have a European legislative body, that has been supporting us for four years. I can see Sophie, I can see Jude, I can see all these people who have been instrumental in helping us. Thank you. My heartfelt thanks to you; as European citizens, we thank the European Legislative.

We have a European Executive that won’t even listen to us.

And so us, as citizens, what we will do, is we will listen to the basic rights of the separation of powers. And what the separation of powers tells us is that when the Executive fails in its mandate, we can turn to the judiciary.

And that for me is a nice segue today, as I’m sure we will hear today from Filippo Noseda [London-based Mishon de Reya partner involved in a crowd-funded FATCA legal challenge in the UK], who is present, and Jenny [the crowd-funded case’s litigant], because they are doing what needs to be done to protect European citizens.

Which is saying that European norms are being breached by FATCA, the judiciary will recognize this, if the executive fails.