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Lebanese with American citizenship have reacted with serenity to the Foreign Account Tax Compliance Act, or FATCA, and with relative indifference to reports of massive surveillance conducted by the National Security Agency. Moreover, to many of them the two programs are separate. But they must realize that both derive from a similar rationale and may ultimately feed off each other.
FATCA, like the NSA surveillance programs, is justified by a notion that all personal information is potentially valuable to the federal government – whether it is to fight tax evasion in the first case, or to combat terrorism in the second (even if the information collected by the NSA often seems to go well beyond fighting terrorism). This line of reasoning has led to a view that the privacy of Americans is not sacred if undermines what is perceived as the greater good – though who defines that good is a matter of debate.
As of next year, FATCA will enter into force. It is a program introduced by the Internal Revenue Service that requires foreign financial institutions to report annually on all accounts of Americans worth over $50,000. If an American citizen holds the account with a non-American, usually a spouse, this non-citizen will also be included in the financial institution’s reporting. The American authorities will be told what funds went into the account, and when, what sums left the account, and when, and the account balance.
There is still a question as to whether FATCA can be implemented. The US government has sought to sign inter-governmental agreements, or IGAs, with other nations to allow FATCA to work. That’s because in many countries it is illegal to hand over bank information to a foreign government, or bank clients are protected by banking secrecy laws. Therefore these agreements are needed to give legal protection to institutions reporting to the Americans.
However, many countries are demanding reciprocity in exchange for the IGAs. They want American financial institutions to also give them information on their nationals with accounts in the United States. Because this will impose a heavy burden on American banks, both the Texas Bankers Association and the Florida Bankers Association have filed a federal lawsuit against the Treasury Department and the IRS, saying they would lose billions of dollars from the measure. Protests from within Congress have further cast doubt on the likelihood of reciprocity, which could ultimately sink FATCA.
Already, FATCA has been delayed until the middle of 2014, and some in Congress have suggested that the law must be repealed. But beyond the fiscal implications of FATCA lies a more disturbing reality. The IRS has authorized itself to enter one of the most private domains of Americans, their bank accounts, and it has the legal framework necessary to use this information in matters unrelated to taxation.
FATCA is even worse than the already invasive collection of telecommunications metadata being carried out by the NSA. Metadata is information pertaining to communications, but does not include the actual content of conversations. FATCA is a look into the content of accounts, and would almost certainly have provoked outrage had it been implemented in the United States.
Can the information gleaned through FATCA be shared with other government agencies, especially those seeking to uncover terrorist activities? According to the Association of Certified Financial Crime Specialists, the answer is yes. A closer examination of the US tax code, the ACFCS has argued, proves that anyone who actually “believes that his or her problems with US agencies from disclosure of non-US accounts will be limited to tax issues is mistaken.”
Title 26, Section 6103 of the tax code opens doors that allow US government agencies, including intelligence agencies, and even Congress, to gain access to information obtained through FATCA. For instance, ACFCS notes, Section 6103 “permits disclosure of ‘return information’ to certain Federal officers and employees and law enforcement agencies for purposes of combating terrorism.”
Here FATCA intersects with the logic behind the NSA surveillance programs, allowing federal agencies to share the private accounts of individuals in criminal investigations. But while there are legal safeguards to protect the rights of such individuals, the reality is that when it comes to terrorism, the tendency of judges is to give the benefit of the doubt to intelligence and law enforcement agencies.
Where dual Lebanese-American citizens, among others, should be concerned is that FATCA will provide the American authorities with free access to the Lebanese banking system. Once that information is readily available, expect certain agencies to look at it very closely, and perhaps refer names to the NSA surveillance programs in cases of allegedly suspicious behavior. The law does not allow fishing expeditions, and there must be probable cause to justify sharing a person’s returns; but FATCA will do more than determine whether Americans are reporting income truthfully. It represents an additional means through which the government can keep tabs on citizens.
In that context, Shiite Lebanese-Americans may be particularly vulnerable to surveillance, given the possibility of ties with Hezbollah. That’s not to say that such action would be defensible, but given the frequency of ethnic profiling after the September 11, 2001 attacks, don’t assume the authorities will err on the side of caution, especially when they have the authority allowing them to push further.
As the NSA’s surveillance has shown, the US government will usually interpret its mandate in the widest possible terms when it can justify this on the grounds of national security. FATCA gives it a new lever with which to work. The law rides roughshod over individual privacy, and if it passes, it will create another window, and a frightening one, that the intelligence agencies can open on American citizens.
FATCA, like the NSA surveillance programs, is justified by a notion that all personal information is potentially valuable to the federal government – whether it is to fight tax evasion in the first case, or to combat terrorism in the second (even if the information collected by the NSA often seems to go well beyond fighting terrorism). This line of reasoning has led to a view that the privacy of Americans is not sacred if undermines what is perceived as the greater good – though who defines that good is a matter of debate.
As of next year, FATCA will enter into force. It is a program introduced by the Internal Revenue Service that requires foreign financial institutions to report annually on all accounts of Americans worth over $50,000. If an American citizen holds the account with a non-American, usually a spouse, this non-citizen will also be included in the financial institution’s reporting. The American authorities will be told what funds went into the account, and when, what sums left the account, and when, and the account balance.
There is still a question as to whether FATCA can be implemented. The US government has sought to sign inter-governmental agreements, or IGAs, with other nations to allow FATCA to work. That’s because in many countries it is illegal to hand over bank information to a foreign government, or bank clients are protected by banking secrecy laws. Therefore these agreements are needed to give legal protection to institutions reporting to the Americans.
However, many countries are demanding reciprocity in exchange for the IGAs. They want American financial institutions to also give them information on their nationals with accounts in the United States. Because this will impose a heavy burden on American banks, both the Texas Bankers Association and the Florida Bankers Association have filed a federal lawsuit against the Treasury Department and the IRS, saying they would lose billions of dollars from the measure. Protests from within Congress have further cast doubt on the likelihood of reciprocity, which could ultimately sink FATCA.
Already, FATCA has been delayed until the middle of 2014, and some in Congress have suggested that the law must be repealed. But beyond the fiscal implications of FATCA lies a more disturbing reality. The IRS has authorized itself to enter one of the most private domains of Americans, their bank accounts, and it has the legal framework necessary to use this information in matters unrelated to taxation.
FATCA is even worse than the already invasive collection of telecommunications metadata being carried out by the NSA. Metadata is information pertaining to communications, but does not include the actual content of conversations. FATCA is a look into the content of accounts, and would almost certainly have provoked outrage had it been implemented in the United States.
Can the information gleaned through FATCA be shared with other government agencies, especially those seeking to uncover terrorist activities? According to the Association of Certified Financial Crime Specialists, the answer is yes. A closer examination of the US tax code, the ACFCS has argued, proves that anyone who actually “believes that his or her problems with US agencies from disclosure of non-US accounts will be limited to tax issues is mistaken.”
Title 26, Section 6103 of the tax code opens doors that allow US government agencies, including intelligence agencies, and even Congress, to gain access to information obtained through FATCA. For instance, ACFCS notes, Section 6103 “permits disclosure of ‘return information’ to certain Federal officers and employees and law enforcement agencies for purposes of combating terrorism.”
Here FATCA intersects with the logic behind the NSA surveillance programs, allowing federal agencies to share the private accounts of individuals in criminal investigations. But while there are legal safeguards to protect the rights of such individuals, the reality is that when it comes to terrorism, the tendency of judges is to give the benefit of the doubt to intelligence and law enforcement agencies.
Where dual Lebanese-American citizens, among others, should be concerned is that FATCA will provide the American authorities with free access to the Lebanese banking system. Once that information is readily available, expect certain agencies to look at it very closely, and perhaps refer names to the NSA surveillance programs in cases of allegedly suspicious behavior. The law does not allow fishing expeditions, and there must be probable cause to justify sharing a person’s returns; but FATCA will do more than determine whether Americans are reporting income truthfully. It represents an additional means through which the government can keep tabs on citizens.
In that context, Shiite Lebanese-Americans may be particularly vulnerable to surveillance, given the possibility of ties with Hezbollah. That’s not to say that such action would be defensible, but given the frequency of ethnic profiling after the September 11, 2001 attacks, don’t assume the authorities will err on the side of caution, especially when they have the authority allowing them to push further.
As the NSA’s surveillance has shown, the US government will usually interpret its mandate in the widest possible terms when it can justify this on the grounds of national security. FATCA gives it a new lever with which to work. The law rides roughshod over individual privacy, and if it passes, it will create another window, and a frightening one, that the intelligence agencies can open on American citizens.
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