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The Inter-Governmental Agreements (IGAs)From quite early on, it became clear that the bureaucraticload on FFIs would be such that many ofthem would simply refuse to have American clients,which wasn't exactly what the Treasury had in mindwhen it promoted FATCA; so the idea emerged ofhaving agreements between the Treasury and foreigngovernments which would allow those governmentsto fulfill the requirements of FATCA by collectingthe necessary data from their own FFIs and sendingit in bulk to the IRS. Many governments turnedout to be quite happy to collect extra informationfor their own benefit as part of "helping" their FFIs,and the idea caught on rapidly, even leading somegovernments to impose their own "mini-FATCAS"on their FFIs and in the case of the UK, on its "offshore"dependent territories (see below).in respect of nationals of the partner country. Thismay come as an unwelcome surprise to US financialinstitutions, and some of the domestic difficultiesraised by FATCA are explored below.Both 1A and 1B straightforwardly place the partnergovernment in the shoes of FFIs in the countryconcerned; but they are not completely standardized.From the beginning, the templates allowedfor a degree of customization, and in fact there hasbeen quite a lot of that in the IGAs which have sofar been signed.The Treasury says it is negotiating IGAs with morethan 75 countries, of which it has listed about 50,but so far there seem to be just eight signed IGAs,of which just one is Model 2 (with Switzerland).There are now three types of IGA:1Model 1A ; Model 1B 2 ; and Model 2 3Model 2 merely agrees that the country concernedwill ensure that its laws and regulations permit itsFFIs to perform the reporting procedures laid outunder FATCA. In the case of Switzerland, for instance,this would not have been the case withoutchanges, which are being made.Model 1 implements FATCA as drafted, but itcomes in two forms: 1A, which is reciprocal, and1B which is not."Reciprocal" means that US FFIs will have to mirrorthe requirements of FATCA in the reverse directionAt the end of May, after signing its IGA with Germany,the Treasury said that in future it would limitthe customizable aspects of IGAs, given that the finalregulations issued earlier in the year were muchmore prescriptive than earlier texts.The Foreign Response To FATCAAt a guess, the Treasury must be quite pleased thatforeign governments have keeled over and rushedto enter IGAs, when they might have been expectedto rear up and cry "extra-territorial legislation."The reason, surely, is that any tax collector whocan say: "I have to ask you for information aboutyour clients' assets because the mighty USA says Imust," is surely going to grab at the chance. It's ashort step from there to imposing a kind of localFATCA on your own FFIs, or in the case of the12