By NATARIO McKENZIE Tribune Business Reporter nmckenzie@tribunemedia.net DUAL citizenship issues are a "loophole" in the US Foreign Account Tax Compliance Act (FATCA), a Bahamian attorney said yesterday, noting that there has been a proliferation of dual status taxpayers from Latin America in particular. Speaking at a Bahamas Institute of Financial Services (BIFS) conference on FATCA, Ryan Pinder, also the MP and PLP election candidate for Elizabeth, said the dual citizenship issue has not been addressed and may be hard to close. He told Tribune Business: "FATCA obligates foreign banks and other financial institutions to report the individual account information of US citizens and US residents, green card holders, taxpayers. "There has been a proliferation, especially from Latin America, of dual status taxpayers. If they come and open an account with a foreign financial institution on their non-US passport, how is a financial institution to know if that person has US tax status, and therefore comply with their requirements to the IRS in reporting information on US account holders?" Under US law and in FATCA's eyes, that persons is treated as a US account holder because he is a US taxpayer. The question, Mr Pinder said, is how Bahamian financial services provders are able to detect dual US citizenship clients, and whether it would be too difficult to enforce. Lawrence Lewis, a partner at Deloitte & Touche (Bahamas), told Tribune Business that the proposed FATCA regulations give financial institutions relief from liability, provided they have exercised due diligence in such situations. "One of the things that was in the proposed regulations was relief from strict liability. There was concern that if a client only presented, for example, Bahamian identification but somehow it was later found out that that person was actually a dual citizen, would the institution be liable for the penalties and interests in withholding tax that should have been withheld from that person," Mr Lewis said. "The IRS has said that if you have exercised an acceptable level of care with respect to identifying, documenting and going through the due diligence procedures, then you - as an institution - will not be held liable for that. "I guess it is somewhat of a loophole, and I'm sure there will be some people who will try to exploit it. I think the question will be what reaction will the institutions have. I believe there will be significant incentives to try as hard as possible to ensure that doesn't happen." FATCA is an important development in US efforts to combat tax evasion by persons holding investments in offshore accounts. Under FATCA, US taxpayers holding financial assets outside the US must report those assets to the Internal Revenue Service (IRS) or face penalties. FATCA will also require foreign financial institutions to report directly to the IRS certain information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest.