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On Canada Day and thereafter, Canadians or anyone else living in this country who walk into a bank to open up an account, invest in a mutual fund or buy life insurance will be required to prove that they are not American.

[np_storybar title=”Canada signs agreement to dull impact of U.S. crackdown on tax cheats” link=”http://business.financialpost.com/2014/02/05/canada-signs-agreement-to-dull-impact-of-u-s-crackdown-on-tax-cheats/”]Canadian banks will soon begin collecting detailed citizenship and residency information about their clients, some of which will make its way through the Canada Revenue Agency to authorities in the United States as that country cracks down on tax cheats.

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That is the new reality now that the federal government in Ottawa finally buckled and signed onto a controversial U.S. tax agreement this week — the Foreign Account Tax Compliance Act (FATCA) — requiring financial institutions around the world to disclose to the U.S. Internal Revenue Service information about foreign accounts held by American citizens and others who might owe money to the U.S. tax man. The primary purpose of FATCA is to identify U.S. citizens who aren’t reporting global incomes. International banks have been targeted because U.S. Congress is convinced they facilitate tax cheats through offshore accounts and other means. In 2010, it passed a law giving the IRS powers to pursue tax avoiders and evaders regardless of where they live.