Jersey, Guernsey and IOM to put IGAs in place with the US for FATCA Compliance

In a rare show of unity, Guernsey, Jersey and the Isle of Man have today simultaneously announced their intention to negotiate intergovernmental agreements with the USA to implement FATCA, in a form similar to that signed between the UK and the USA in September.

Although the signing of an IGA will not remove the burden of data gathering and reporting from the individual finance industry businesses, it will nevertheless obviate the need for them to have to deal directly with the IRS, and instead to pass their collated data to their own governments.  As such, the move will be welcomed by industry representatives, who are grappling with the practical impacts of complying with the new regulations. 

It is understood that discussions have already taken place at official level between the three Crown Dependences jointly and the USA to agree the principle of the IGAs, and that formal negotiations will now take place with the intention of concluding intergovernmental agreements as soon as possible.

Some commentators had expressed concern regarding whether the USA would permit the offshore centres to enter into IGAs, but the reality is that the US would almost certainly be overwhelmed by the burden of dealing with each FFI individually, and therefore has a powerful incentive to put IGAs in place wherever possible.  Given that a lot of FFIs have operations in two or even all 3 of the three Crown Dependencies, then it makes a great deal of sense for them to work together to agree the same form of IGAs so that FFIs are not having to gather data in different formats in each territory – a good example of where the territories can cooperate without compromising their relative competitiveness as a business location.