Russian Banks Look for Way Out of US Internal Revenue Service Collaboration

MOSCOW, December 3 (Sputnik) — Russian banks should have a way in which to opt out of cooperation with the US Internal Revenue Service (IRS), the Russian National Financial Market Council (NFMC) said in a letter sent to Russia's deputy finance minister, cited Wednesday by Russia's Izvestia newspaper.

The NFMC letter to Russia's Deputy Finance Minister Alexei Moiseev highlighted deficiencies in current Russian legislation which does not provide any mechanism for Russian banks to remove themselves from foreign tax authorities' registries, nor does it allow for Russian banks to terminate their contracts with foreign tax departments, Izvestia reported.

Extra financial burdens, associated with adherence to international tax rules, are acutely felt by smaller banks, Andrei Emelin, NFMC chairman, told the newspaper. "[The Russian banks are] forced to bear additional costs, related to changes in internal control procedures, reconfiguration of automated banking systems, training or employment of relevant staff."

A survey by Izvestia revealed that 20 out of 50 banks questioned said that they wished an option existed to forgo collaboration with the US IRS.

The US Foreign Account Tax Compliance Act (FATCA), adopted in 2010, requires US citizens to inform the IRS about their foreign accounts and obliges foreign banks to report information to the US tax service on any accounts held by US citizens in their bank. Foreign banks are due to begin transferring such information to the US IRS in March 2015. Failure to comply with FATCA could result in the bank in question being levied with higher commission for payments processed via correspondent accounts in US banks.