For all the groaning about FATCA, there is one “red herring” which should be given the lie right away, and that is the silly notion that FATCA is an attempt to force the application of U.S. law on foreign financial institutions. In fact it does nothing of the sort. The key to FATCA is the requirement of Internal Revenue Code section 1471(b)(1) which says that in order to avoid the 30% withholding tax, an FFI has to enter into a written agreement with the IRS to comply with certain best practices such as the Know Your Customer protocols, and agree to file an annual report with the IRS disclosing the names of the people who are enriching the foreign bank while at the same time enjoying their wonderful services. What is more interesting is the requirement of section 1471(b)(1)(F)(i) which requires Americans with assets abroad to give the bank a waiver of the applicability of that country’s bank secrecy laws so that our government can correctly apply the Internal Revenue Code to the U.S. persons who are really subject to its jurisdiction. My question for those of you who are now engaged in the process of implementing FATCA, what if the waiver is forthcoming but the foreign bank refuses to disclose the names of its American customers for fear of violating the laws of their own countries? Can anyone share their wisdom on how to handle that issue?