Financial Transparency Coalition

New Rule Still Exempts Many Jurisdictions; GFI Urges IRS to Expand Requirement to Accounts Held by All Non-Resident Aliens

WASHINGTON, DC – Global Financial Integrity (GFI) applauded the U.S. Treasury Department and the Internal Revenue Service (IRS) for last night adopting a regulation (TD 9584) requiring banks to report information about interest earned on U.S. deposit accounts held by non-resident aliens, as banks have been required to do for accounts held by American citizens and Canadians.  GFI and others have long advocated for implementation of this rule as an important tool in the fight against international tax evasion, money laundering, drug trafficking, corruption, and terrorist financing.

However, while the GFI acknowledges the new regulation is a significant step in the right direction, the implementing rules exempt banks from reporting information on accounts held by residents of jurisdictions with which the United States does not have a bilateral exchange of information agreement.

“We are thrilled to see that the U.S. government is going to know a lot more about who has money in U.S. banks,” said Heather A. Lowe, Legal Counsel and Director of Government Affairs at GFI. “Yet, residents from many jurisdictions will still be able to hide money anonymously in deposit accounts in the United States.”

“In addition to posing multiple national security risks, this lack of reporting with respect to deposits held by citizens of some jurisdictions makes it difficult for law enforcement to keep the proceeds of international drug trafficking, money laundering, corruption, terrorist financing and other crimes out of the U.S,” continued Ms. Lowe.  “The new rules are a very welcome improvement, but we’d like to see the rule expanded to require information on accounts held by all non-resident aliens.”

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Notes:

Some countries with which the US does not have tax agreements in place but rate highly on the Tax Justice Network Financial Secrecy Index are:

• Singapore (#6 on Financial Secrecy Index)
• Bahrain (#10 on Financial Secrecy Index)
• United Arab Emirates – Dubai (#18 on Financial Secrecy Index)
• Lebanon (#22 on Financial Secrecy Index)
• Malaysia (#27 on Financial Secrecy Index)
• Mauritius (#32 on Financial Secrecy Index)

Contact:

Clark Gascoigne
+1 202 293 0740 x222
cgascoigne@gfintegrity.org

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Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization, which promotes transparency in the international financial system.

For additional information please visit www.gfintegrity.org.

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