Us Treasury Withdraws Law To Report Bank Interest On Latin American Deposits
By Frank Norton
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South Florida bankers praised Tuesday’s partial lifting of a US Treasury Department proposal that requires banks to report deposit interest on non-resident alien accounts.
The legislation would have forced banks to report the interest earned to depositors’ home countries, which bankers said could breach privacy, scaring off depositors and jeopardizing future deposits.
The Florida Bankers Association in October released an economic impact report that showed state banks could lose $18 to $34 billion of a nearly $50 billion pool of non-resident alien deposits, known as NRA to bankers, if the law passed. Association President Alex Sanchez, a former Miami resident, said more than 85% of the state’s non-resident alien deposits are in South Florida.
"Our banks use those NRA funds to lend to the local community for Joe’s Hardware store or Mary’s market," he said. "They turn around and use those funds to build homes and drive the economy."
Bankers feared the bill would jeopardize the safety of Latin Americans who provide the lion’s share of the deposits by potentially revealing US account information to guerillas, terrorists and kidnappers.
Earlier this year, a chorus of high-ranking officials including Gov. Jeb Bush and US Reps. Ileana Ros-Lehtinen, Lincoln Diaz-Balart and Dave Weldon denounced the proposal as an economic killer.
A revised US Treasury Department proposal, outlined this week, is scaled back to affect 13 European countries, plus Australia and New Zealand, that have tax treaties with the US. Europeans account for as little as 5% of non-resident alien deposits in Florida, Mr. Sanchez said.
Mario Sacasa, vice president of international programs for the Beacon Council, called the revised proposal a victory for South Florida banking and business development.
"The financial services sector in our community would have been negatively impacted to the point of job loss," he said. "This revision is good for the county."
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