FATCA Compliance Problematic For Bahamas And Panama

The Foreign Account Tax Compliancy Act, known as FATCA, is causing problems for banking jurisdictions such as Cayman Islands, Panama or the Bahamas. Although the law is targeted at American citizens, it can have many unwanted implications for non-US citizens alike.

Under FATCA, any bank anywhere in the world serving US citizens will be required to report on US account holders and disclose their balances, receipts, and withdrawals to the US tax authorities or face a 30% withholding tax on financial assets held in the US by the said bank.

Obviously, the goal is to increase tax compliance of American owned bank deposits abroad, but what it in effect does is attempting to regulate sovereign (banking) jurisdictions, requiring them to amend laws and change procedures.