Evidence of meeting #35 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was information.
A video is available from Parliament.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
If they fail to report somebody who the IRS or the American government deems a U.S. citizen...?
Acting Vice-President, Policy and Operations, Canadian Bankers Association
The obligations on the financial institution are clear, and they're laid out in the agreement. If somebody is a U.S. citizen, but there's no indicia in the indicators in their account suggesting they are—
NDP
Acting Vice-President, Policy and Operations, Canadian Bankers Association
No, that's—
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Somebody slips through the screen, the electronic screen Mr. Allen was talking about, the assessment you do. Americans come back and say, “CIBC, Royal, we found 1,000 or 10,000 people, clients of yours, who we deem to be Americans, or American persons.” Is the bank penalized? Is the bank put on a watch? Is there any consequence?
Acting Vice-President, Policy and Operations, Canadian Bankers Association
The bank will then do its due diligence to show it, to say, look, they've done their process, they've gone through and checked their indicia, and they've assessed whether or not somebody is a U.S. person, and if they are not a U.S. person, they're done.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
I don't know why this question is difficult.
What I'm asking is, you do your screen, you forward the names of people who you believe are U.S. persons to the CRA, then to IRS—
Acting Vice-President, Policy and Operations, Canadian Bankers Association
Okay.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
—but you're missing people. Is the bank financially on the hook? Are you placed on a list? Is there any consequence under the IGA, as you understand it, that comes back to your members?
Acting Vice-President, Policy and Operations, Canadian Bankers Association
The members' obligation, the institutional obligation, the legal obligation, is to the CRA, not to the IRS.
Acting Vice-President, Policy and Operations, Canadian Bankers Association
So in that instance, then, as with any tax compliance issue, we have to discuss it with CRA.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Can you understand our concerns around the definition of citizenship? As Mr. Richardson says, this is not always citizenship as you and I would understand it, as the common person would understand it. We've been made aware of instances—many of them—of people who, under any common definition, wouldn't be deemed American persons. But as we've all agreed at this panel and others, that decision is not made by the Canadian government. It's made by the American government, correct? You can understand the concerns?
Acting Vice-President, Policy and Operations, Canadian Bankers Association
I appreciate the challenge, but that's a separate issue, from my perspective, from the intergovernmental agreement. That's a tax issue associated with the United States as opposed to the information sharing agreement.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Sure. Will your members notify their clients that their information is being passed on to the CRA?
Acting Vice-President, Policy and Operations, Canadian Bankers Association
Bear in mind that in the process if indicators come up, I go back to you to give you an opportunity to clarify whether or not you are a U.S. person, so as a consequence, everything is passing along as part of the process.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
So is it required in the process that anybody whose information will be passed on to the CRA will be made aware?
Acting Vice-President, Policy and Operations, Canadian Bankers Association
What's required in the process is that I have to go back to you. I literally have to go back to you and say, “I've got information on an account that you are a U.S. person, and is this correct, yes or no?” There's an engagement requirement right in there.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
So the answer is yes, that everybody whose information will be passed on to the CRA by your member institutions, your banks, will be made aware that their information is being passed on.
Acting Vice-President, Policy and Operations, Canadian Bankers Association
The only time it might not happen would be if literally in the file you've already said, “Yes, I'm a U.S. person, and I've acknowledged that.”
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Okay. I'm the politician here, so I get to dodge questions. What I want to know is, will people be made aware if their information is being passed on to the CRA and they've been deemed by your member institutions to be American persons?
Acting Vice-President, Policy and Operations, Canadian Bankers Association
Well, with due respect, I believe I've just answered that question.
Acting Vice-President, Policy and Operations, Canadian Bankers Association
I've explained it in total.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Ms. Bernier, I have a question about where the Privacy Act fits in all of this, because we expect to see—and we've already seen—court challenges coming forward. Some have cited our charter and some have cited the Privacy Act.
Under section 7—we've talked about section 8 maybe being subsumed—it is stated, “Personal information under the control of a government institution shall not, without the consent of the individual to whom it relates, be used by the institution”, with a couple of provisos.
On the surface of what we're talking about, once the information...once the CRA plays the role of middleman between the IRS and the institutions Mr. Hannah represents, is there an obligation under the Privacy Act that they must by law be made aware?