Friday, April 4, 2014

Citibank May Disclose Bank Info to Authorities

Citibank
For franchisers who are using their credit cards regularly in conducting their business, this bit of news would either be treated with a grain of salt or completely change the way they transact with their clients.

When the locally-popular Citibank Mastercard and Visa credit cards announced they will be used as tools of the powerful US Internal Revenue Service (IRS) and the Philippine Bureau of Internal Revenue (BIR) to ferret out hidden wealth and tax evasion of Americans, green card holders and even Filipinos with undeclared Philippine assets and deposits, some entrepreneurs panicked.

However, is it really worth the trouble or we can ignore this and get on with our lives? Initial reports suggest that if you have something to hide or are not sure of what you are doing, then it is better to close your Citibank account for now until after you have straighten your financial portfolio.

In its latest advisory to its Philippine-based credit card holders and depositors, Citibank informed clients of more stringent regulations on top of those it had already imposed since last year.

These additional measures include:
  1. Blocking any transaction or payment of US citizens and green-card holders that could result in Citibank, its affiliates and even third-party providers contravening the US Foreign Account Tax Compliance Act (FATCA) and any intergovernmental agreement between the United States and any other foreign jurisdiction, the Philippines included.
  2. Withholding by the bank, its credit cards and even third-party service providers any amount or applicable tax like withholding, income, value-added or even tax on the sale or disposition of property even without the client's consent.
  3. Disclosing to any government authority for any audit or investigation even by "prosecuting" authorities personal and account information of banking and credit card clients.
  4. The client waiver on confidentiality subsists "even after the closure or cancellation of the account/s
The third point is not clear, but it mean that Citibank had found a way to effectively bypass the Philippine Banking Secrecy Law since, in the US bank's view, any client's opting to continue his/her financial relationship despite the fine print already constitutes his/her grant of a waiver on confidentiality.

In short, Citibank can and may share customer data even with the US National Security Agency (NSA).

And if any client is thinking of even suing Citibank for sharing the hitherto confidential information or acting like a government collection agency, the US multinational has already covered itself for any such eventuality:

"You agree to hold us free and harmless from any liability that may arise from the processing and use of your personal and account information, and other information pertaining to your account/s with other financial and non-financial institutions," the Citibank advisory said.

Just to be doubly sure, Citibank added the following caveat: "You declare that you have provided any notices, consents and waivers necessary to permit us, our authorized third parties, and our/their third-party service providers and payment infrastructure providers to carry out the actions described in this provision."

Moreover, "you acknowledge that we will not be required to reimburse you for any amount withheld or deducted by a payment infrastructure provider," Citibank said in no uncertain terms.

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