Bankers prefer an inter-governmental agreement with the United States to share bank-account information of the US citizens in Bangladesh, doing which is mandatory under their law.
Such a change is being suggested as the bankers found complicated the exiting system of sharing banking information.
The banks are now required to share bank-account information of US citizens by signing individual agreement with Internal Revenue Services (IRS), the tax authority of US government.
Bankers found the existing system clumsy and time-consuming, too.
Under the Foreign Account Tax Compliance ACT (FATCA) of the United States the foreign financial Institutions (FFI) ought to share information on bank accounts' details of US citizens here.
However, other countries, including neighboring India, have signed IGA to share bank information through central banks in an integrated way.
Talking to the FE Wednesday, Association of Bankers, Bangladesh (ABB) Chairman Ali Reza Iftekhar said the ABB preferred the IGA in FATCA as banks are now required to sign individual agreements for information sharing.
"For example, it is not feasible to sign 51 agreements for 51 banks. Other countries are sharing information through IGA," he said.
It would be easier to share information in an integrated way through Bangladesh Bank (BB), he added.
FATCA is a US act made in 2010 to monitor tax compliances of the US citizens who live outside that country. Foreign financial institutions have to report to the IRS about their respective US clients.
FFIs have to report to the IRS about certain information on accounts held by US taxpayers, its green-card holders or by foreign entities in which they hold substantial ownership interests.
In case of failure in reporting to the IRS, the bank's money in 'Nostro' accounts in the US will be withheld.
Nostro accounts are used to facilitate settlement of foreign exchange and trade transactions.
As per the definition, all banks as defined under the Bank Company Act 1991 came within the purview of FATCA.
There are two models to share bank-account information of US citizens under the FATCA. In one model, two countries can sign IGA to send integrated bank-account information of US citizens to IRS while another model requires each bank and financial institution to sign 'participation agreement' individually with IRS. Currently, Bangladesh is following the rigorous second one.
The BB issued a circular on January 16, 2014 to the banks and FIs for complying with the FATCA provisions.
However, there was a move of the government following ABB's suggestions on IGA.
The Banking and Financial Institutions division under the Ministry of Finance earlier had asked the BB to explore the provision for signing IGA under the FATCA.
Officials said the central bank has examined the provision and found no restrictions in the FATCA on sending information through IGA.
However, Banking Division secretary M Aslam Alam said the move stalled as the government is holding dialogue on Ticfa (trade and investment cooperation framework agreement).
Bangladesh signed the much-talked-about Ticfa deal with the US to establish a forum with representatives from both parties to discuss opportunities and interests of bilateral trade and investment and identify and work to remove impediments to trade and investment.
He said the bilateral issues are being discussed in the Ticfa dialogue.
"We will try to consider the suggestion. Now the process of bank- account-information sharing will be continued under the current system," he added.
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