One More Time..

To start, thanks to the folks who took the time to answer my question concerning FBAR filing but I've got one more question for anyone in the know that's slightly niggling at me for reasons of understanding.
With the advent of FATCA compliance from all FFI's, especially high street banks in the U.K starting on July 1st 2014, does anyone know exactly what and who the bank is required to divulge information to the IRS about?... Is it ALL Americans and ALL accounts or just those Americans with accounts that meet or surpass the mandatory thresholds... In other words, Joe Bloggs The American has a small checking account that has say, no more that £1200 in it at any given moment, under FATCA rules, the bank needs to notify the IRS about this account?...

Pre-existing accounts of less than $50,000 don’t need to be reported. FFI may look at any U.S connection however, for example, U.S address, telephone number, U.S passport should the threshold be exceeded (aggregated). Any new account opened, unless exempted will ask if you’re a U.S person as part of the take on procedure, (some FFI's will ask this for any initial deposit, even under 50K). So this far reaching law could have implications for not only USC’s GC Holders, but others that are considered U.S persons for tax purposes. S Corp, E2, H1B visa holders come to mind. I would hazard a guess here, but if you file a 1040 and not a 1040NR, you would come under FATCA

That's a very good question and I really do wish I knew the answer. In spite of what many may tell you, we won't know for sure how the banks will fully adhere to the identification of 'US Indicia' until the full rollout of FATCA in 2016 or 2017 has occurred. The rollout of identification is in stages over several years.

As for thresholds for reporting, the IGA confirms that any account of a US Person over $50,000 must be reported (if the bank must report it), but the wording of the IGA seems to allow banks to report accounts of any value, if they chose, including those under $50,000. Much will depend on the banks' determination of cost efficiency for the task of reporting.

Ask your bank. I did, and received some very surprising insights. 

Thanks for the replies folks...OAP... I made a general inquiry with a member of staff of my local bank too ( Y'know.. The one with the Black Horse sign ) and all I got was "Yeah, I think I heard something about that", so I just left it at that... Just got me thinking though, how long before the government mandated micro-chip implantation program starts

That's a very good question and I really do wish I knew the answer. In spite of what many may tell you, we won't know for sure how the banks will fully adhere to the identification of 'US Indicia' until the full rollout of FATCA in 2016 or 2017 has occurred. The rollout of identification is in stages over several years.

As for thresholds for reporting, the IGA confirms that any account of a US Person over $50,000 must be reported (if the bank must report it), but the wording of the IGA seems to allow banks to report accounts of any value, if they chose, including those under $50,000. Much will depend on the banks' determination of cost efficiency for the task of reporting.

Ask your bank. I did, and received some very surprising insights.  

Sorry for bumping an old thread. It is also interesting that the agreement says "A New Individual Account that is a Depository Account is not required to be reviewed, identified, or reported as a U.S. Reportable Account unless the account balance exceeds $50,000 at the end of any calendar year or other appropriate reporting period".
Would that mean that an account that was over $50,000 during most of year but that on the 31st December is under this value would not (have to) be reported? Just wondering how this is interpreted....
Would you mind sharing the surprising insights you got from your bank?

So the guidance notes suggest that what matters is the balance on the 31st December.

Depository Accounts
The balance or value will be that shown on the 31 December, unless the
account is closed on a date before that.

Example 1
A Depository Account belonging to a US Person with a balance of $65,000 at
31 December will need to be reported. The following year there is a large
withdrawal from the account bringing the balance down to $20,000 at 31
December.  As the balance is now below the $50,000 threshold the account
does not need to be reported.

Source:
http://www.hmrc.gov.uk/drafts/uk-us-fatca-guidance-notes.pdf [nofollow]

Would still be interested in knowing if banks will be reporting *all accounts* or those that are *above the threshold* only.

Sorry for bumping an old thread. It is also interesting that the agreement says "A New Individual Account that is a Depository Account is not required to be reviewed, identified, or reported as a U.S. Reportable Account unless the account balance exceeds $50,000 at the end of any calendar year or other appropriate reporting period".
Would that mean that an account that was over $50,000 during most of year but that on the 31st December is under this value would not (have to) be reported? Just wondering how this is interpreted....
Would you mind sharing the surprising insights you got from your bank?

I'd prefer not to share the conversation. This isn't meant to be difficult, but I fear it may be misleading.

We've had several threads since this original posting that indicate some banks/building societies are asking about US indicia at account opening. We don't know which banks or how that information will be used.

It seems prudent to assume banks will report any account, no matter the account balance at 31 Dec., to HMRC. That would be the safest approach for the bank, and the banks safety will prevail over any other considerations. On the other hand, the banks can not be best pleased at the situation they now find themselves in and may adhere to the strictest interpretations of the IGA. We still don't know what any particular bank will do and won't know for sure for many more months.

From other sources from around the world, it appears some large international banks intend to report all accounts, irregardless of the account balance. Variances in practice may depend on the particular banks 'history' with the US Dept. Of Treasury, Dept. Of Justice, the type of IGA, or the reputation of the tax jurisdiction.

Despite the 40 some odd pages of rules and regulations contained in the IGAs, there remains a great deal of guidance which is undefined, unclear, or simply unknown. Not surprising considering the massive scope of the exercise.

edit: Guidance notes are just that, guidance. They are not hard, fast rules. Banks may decide to follow the guidance, or they may decide to do something different.

It is of course very easy to avoid the issue entirely for example if you are an FFI like NS&I that exclude all US citizens entirely, but never asks if a new account holder is a US person because US citizens and green card holders should never even think of opening one of their prohibited accounts.

Thanks theOAP for the inputs. I understand your concerns about sharing the conversation you had with your bank.

The agreements and guidance are a interesting read though. It seems like the agreement with the UK is less strict than with other countries, as I have read that in some places financial institutions would have to disclose receipts, withdrawals and payments from the account whereas I don't see that in UK's agreement (where the information seems to be limited to the balance and credits from assets held in the account).

I got a FAQ from my bank saying that the information reported "will be of a personal nature and of financial nature. We will contact affected customers to explain these requirements in full detail. So maybe there will be more information at some stage on which accounts that will be reported? I wonder if they actually already know that themselves...

The fact that the balance "at the end of the calendar year" is the one that is reported suggests that someone who is hypothetically worried about not having filled FBARs could theoretically get the sum of their balances bellow $50k on this day though..

Edit: FBAR limit is $10k not $50k. Got confused with all the numbers

The agreements and guidance are a interesting read though. It seems like the agreement with the UK is less strict than with other countries,.....

All of the Type 1 IGAs (including the UK) are almost identical, save for Annex 2 which will be country specific.

I got a FAQ from my bank saying that the information reported "will be of a personal nature and of financial nature. We will contact affected customers to explain these requirements in full detail. So maybe there will be more information at some stage on which accounts that will be reported?

It varies by bank, but early indications are many banks will discover a US Person by either information given at account opening, or eventually, a search of customers records. There may be a 'welcome pack' which contains FATCA related forms on account opening, or there will be a mailing specifically related to FATCA at a later date following an account opening or further record searches. The bank will indicate they believe there is US indicia on the account. The customer verifies this. If they have a CLN, this is the time to produce it. The mailing will probably contain a blank W-9, a blank W-8, and a declaration to sign stating the customer agrees to the bank forwarding information to a 3rd party, and agreeing to forego their right to financial privacy under UK legislation.

For example, from the RBS website:
https://www.supportcentre-rbs.co.uk/app/answers/detail/a_id/4022/related/1

No matter how diligent the banks are, there will be US Persons who may slip below the radar. The only way a bank can protect against this is to ask ALL customers about US ties (or, as guya says, deny any US Person an account), and the results will depend upon the honesty and/or knowledge of the customer. (Some people will not believe they have a US tie when in fact, they do.)

My bank took two weeks to answer my questions but that is what they had to say about the reporting threshold... which is kind of in line with your comment of "guidelines being just guidelines":

Foreign Account Tax Compliance Act (FATCA) regulations set a limit of $40,000 for guidance but financial institutions are able to set their own limits for certain groups of customers. XXXXXX Group, of which "my bank" is a division, has exempted all investment holders from limits as part of its compliance with FATCA.