This in from Mark Nestmann, at Nestmann.com.

FATCA, otherwise known as the Foreign Account Tax Compliance Act, is one of the most arrogant and one-sided laws ever passed by Congress. I first wrote about it in this essay.
The idea behind FATCA, which Congress enacted in 2010, is simple: Demand that other countries enforce America’s imperialistic tax laws. And do so by the confiscation of foreign assets, if necessary.
Spearheaded by President Obama, who has promised to shut down “offshore tax havens,” FATCA arrogantly presumes that “foreign financial institutions” will enforce US tax laws. And if they fail to do so? Any US-source income they have in the form of interest, dividends, rents, and similar payments are subject to a 30% withholding tax.
The definition of a “foreign financial institution,” or FFI, is very broad and includes banks, broker/dealers, insurance companies, hedge funds, and private equity funds.
The only way that foreign banks and other international financial institutions can avoid this tax is to act as unpaid IRS informants. Non-US persons investing in the US are affected, too. If their foreign bank isn’t FATCA-compliant, their US income gets whacked 30%.
This withholding was supposed to start in July 2013. It turned out that implementing FATCA was far more expensive and time-consuming than Congress expected it would be. (Sound familiar?) The IRS extended the deadline to July 1, 2014. And shortly before that deadline, the IRS extended the deadline again for any FFI (or in some cases, all FFIs in a country) that had committed to a good faith effort to implement this highly complex law.
You might think that FFIs – and the governments that host them – might refuse to go along with this law. But because the consequences of being effectively locked out of the world’s largest market – the US – are so horrific, most of them have gone along.
Not surprisingly, FATCA and numerous other laws that require FFIs to enforce US money laundering, anti-terrorism, and securities regulations have led most of these institutions to fire their US clients. Perhaps one in 10 – and possibly fewer – non-US banks still permit US citizens or permanent residents to open accounts. That leaves little choice for Americans but to deal only with banks that have agreed to toe the IRS line.
Indeed, the global version of FATCA that many of us predicted (and feared) is now upon us. Many other countries have enacted their own versions of FATCA that override all privacy laws and force residents to give up details of their offshore financial relationships. Then those countries go out and try to strong-arm their neighbors into participating.
Even those countries that haven’t enacted their own versions of FATCA have tried to bully their neighbors into signing one-sided tax information exchange agreements. Colombia is a great example. It recently demanded that its neighbor Panama sign such an agreement and begin sending details of Panamanian bank accounts owned by Colombians back to Colombian tax authorities.
But Panama didn’t go along. It might have something to do with the fact that wealthy Colombians have stashed billions of dollars in Panamanian banks, and Panama has no desire to have those customers repatriate their assets to Colombia.
The US has it easier than Colombia because, like Godzilla, it’s the biggest and the baddest. But even here something very interesting is happening that I think will eventually derail the FATCA project. You see, the agreements that the US has signed with other countries call for the exchange of tax data to actually be… well… an exchange. But there will be no exchange because there’s no procedure in US law for that to happen. In other words, the IRS can demand that other countries send it data, but there’s no legal mechanism in place for the IRS to force US financial institutions to send information to foreign tax authorities.
Obama wants to change that, but fat chance of it happening with a Republican majority in both houses of Congress, along with a resolution from the Republican National Committee calling for the repeal of FATCA. Senator Rand Paul (R-KY) has even promised to filibuster any information exchange agreements that call for the US to send account data to other countries.
Meanwhile, finance ministers in Germany, China, India, and other countries are starting to ask, “Where’s the data on our citizens investing in the US?” And there’s a deafening silence on the US end of that question. The US can’t force its banks to provide this information, and barring a sudden change of heart by the Republican majority in both houses of Congress, the earliest this could change is in 2017, after the 2016 elections.