Move against money laundering

CB directs banks to be FATCA compliant – Move against money laundering says Governor

By Ishara Gamage

Ceylon Finance Today: The Central Bank of Sri Lanka (CBSL) has directed all commercial banks and financial institutions to comply with United States Foreign Account Tax Compliance Act (FATCA) as soon as possible, Governor Arjuna Mahendra told Ceylon FT yesterday.

“Previous CBSL regime hasn’t done anything about this. So, we have to build strong dialogue with all banks to fully implement this within the next year, the Governor said.
He said that compliance with this Act is vital for smooth trade and economic relationships.”Otherwise we will face difficulties in foreign currency transactions”, he remarked.

The Foreign Account Tax Compliance Act (FATCA) is a new piece of legislation introduced by the United States government, to help counter US tax evasion by encouraging better reporting of information.
The Governor said that all Sri Lankan banks committed to becoming fully FATCA compliant, in accordance with the legislative timeline. He also said that he believed that the annual discussions between US Secretary of State John Kerry and Foreign Minister Mangala Samaraweera which were agreed upon by the duo during Kerry’s recent visit to Sri Lanka, would also include matters regarding these aspects as well.
The FATCA was come into force on July 1, 2014 and requires foreign banks to hand over data on clients to the US International Revenue Service (IRS). If a bank does not report such information, it could be subject to a 30 percent withholding tax.
The analysts said that the law will make business with Americans harder, but the US hopes it will raise billions.
The legislation is largely meant to target wealthy individuals with unreported income in countries with low tax regimes, like Switzerland, Luxembourg, or sunny islands in the British Caribbean.