Financial institutions in Saint Lucia and the rest of the Eastern Caribbean Currency Union (ECCU) member countries are now in compliance with new reporting requirements for United States clients, which form part of the Foreign Account Tax Compliance Act (FATCA).

The Act is intended to increase transparency for the Internal Revenue Service (IRS) regarding US persons who may be investing and earning income through non-U.S. institutions.

ECCU based financial institutions, now classed as Foreign Financial Institutions (FFIs) were required to adopt new account opening procedures in order to comply with FATCA rules. To this end, local FFIs have, for several months, been preparing and training employees for the changes, while individual institutions have also issued notifications and information about the new rules to customers.
ECCU member governments adopted the IGA Model 1 which requires financial institutions to submit all FATCA-related information to their respective Inland Revenue Departments for onward submission to the IRS. FATCA states that financial institutions must provide all information on assets of US$50,000 or more held by US taxpayers, or by foreign entities in which US taxpayers hold substantial ownership interest.

Failure of an FFI to submit information could result in a 30 percent withholding tax, and may result in the potential loss of critical correspondent banking relationships. This would affect customers’ ability to transact with the US, our main trading partner. The services affected would be wire transfers, drafts and other payment mechanisms if banks can no longer clear these transactions through US banks.

FATCA does not replace the existing US tax withholding and reporting regimes. It does, however, add additional requirements and complexity to the existing regimes.

The attributes which cause an individual or business to be classified as a US person include: US citizenship, being a lawful resident of the US, and/or US corporations, partnerships, estates, or trusts, where the US exercises primary supervision over administration or where one or more US persons has the authority to control all substantial decisions.

The impact of FATCA is far reaching and impacts any person, US or foreign, to the extent that such person is involved in making or receiving payments that fall within the scope of FATCA.

The Bankers Association of Saint Lucia reiterates the commitment of Saint Lucia's financial institutions to ensuring regional compliance with FATCA and calls on the public to assist financial partners in that regard.

The BA also encourages all clients and prospective clients to visit or call their respective branches for details, if they are affected by this new US legislation, which took effect on July 1.

For additional information please contact Bankers Association President Mrs. Corliss Charles-Sutton at 758.457.6375, email: corliss.sutton@rbc.com; or Bankers Association PRO Mrs. Carole Eleuthere-Jn Marie at 758.450.2662, email: carole.eleuthere-jnmarie@firstcitizensslu.com