Minister of Finance Bob Richards *File photo
Minister of Finance Bob Richards *File photo

Today The Minister of Finance The Hon. E.T. Richards JP MP announced that, after considerable consultation with Bermuda industry stakeholders, and after lengthily discussions with US Treasury officials, the Government of Bermuda has decided to negotiate and sign an Intergovernmental Agreement (IGA) Model 2 with the USA, Bermuda’s closest neighbor and largest trading partner.

US Treasury official Mark Mazur said: “The US Treasury welcomes this decision by the Government of Bermuda to sign one of the Model Foreign Account Transaction Compliance Act (FATCA) Intergovernmental Agreements. We appreciate Bermuda's leadership and look forward to helping facilitate an efficient exchange of tax information and strengthening Bermuda's commitment to global tax transparency.”

Minister Richards also announced that the similar IGA Model 2 format will be signed between Bermuda and the UK, at the request of the UK Government. The UK Government has already produced an official draft IGA Model 2 and provided it to Bermuda as one of the options for Bermuda’s consideration.

“I wish to thank the USA and UK FATCA officials for their very helpful exchanges with Bermuda Ministry of Finance officials over a very long period of time leading up to today’s announcement and I look forward to concluding negotiations with both countries as quickly as possible.” said Minister Richards. “This step will further cement Bermuda as being a reputable jurisdiction for conducting business in a transparent manner.

“In short, Bermuda is doing its part to discourage anyone who comes to a misguided conclusion that they can use Bermuda to engage in breaking the tax laws (FATCA laws or other types of tax laws) of other countries and get away with it.”

Minister Richards further noted that the USA created IGA Model 2 as one of two options countries have available to choose from in order to fully comply with USA policy for government-to-government FATCA agreements.

The USA and UK have created IGA Models 1 and 2 as optional models of equal value in compliance terms. Each country will have a myriad of reasons for choosing one particular model, as does Bermuda.

Minister Richards explained that Bermuda has no need for reciprocal receipt of FATCA-style information from the USA, UK or any other Government nor does Bermuda have laws that prevent clients of Bermuda banks giving their bank the approval to share their client information directly with the IRS, unlike some laws in Europe and elsewhere. Bermuda wanted to support the USA and the UK objective at the Governmental level, of the USA and the UK receiving information (either directly from financial institutions or via the foreign Governments) from foreign financial institutions on an automatic basis.

IGA Model 2 represents a Bermuda Government assurance, an intergovernmental assurance, that the USA and the UK will receive FATCA information on an automatic basis directly from foreign financial institutions in Bermuda and gives assurance that the Government of Bermuda will not hesitate to deploy its Tax Information Exchange Agreement (TIEA) for group requests from the IRS and UK tax authority to seek detailed information on a minority, if any, of clients who refuse to give their approval to their financial agent to give their client information directly to the IRS and UK tax authority under their respective regimes.

In addition to having just confirmed Bermuda’s commitment to FATCA automatic exchange with the USA and UK through the mechanism of  IGA Model 2 that has been offered by both Governments, I also confirm Bermuda’s commitment to sign a FATCA IGA Model 2 with the G5 initiative on multilateral automatic exchange that has recently been announced to be based on the USA FATCA agreements once they have been finalized and are ready for signature. Here again, Bermuda signing the G5 Multilateral framework represents a Bermuda Government intergovernmental assurance that the EU country signatories with Bermuda will receive FATCA information on an automatic basis directly from foreign financial institutions in Bermuda.

Minister Richards finished his statement by saying that “there has been much talk recently about the G8 gold standard on the Beneficial Ownership objective of the Financial Action Task Force (FATF). Bermuda is fully committed to this. As you know Bermuda for decades has required companies setting up shop in Bermuda to file beneficial ownership information with the Bermuda Monetary Authority (most of our peer jurisdictions have not caught up in this area) and we have recently passed legislation to license all Corporate Service Providers (CSPs) in Bermuda and bring them under the umbrella of the Proceeds of Crime Act that imposes the FATF standard on beneficial ownership. Therefore Bermuda is already on record as being committed to this objective through the work of our National Anti-money Laundering Committee (NAMLC).

Minister Richards stated “Regarding my making this announcement on FATCA, the Premier and I received assurances of approval from the UK Government as articulated to us by His Excellency the Governor and the UK Minister for the Overseas Territories at our meeting at the Cabinet Office last week