United States Treasury has made it clear that it intends the new US Foreign Account Tax Compliance Act to have wide coverage and few, if any, carve-outs.The new law, which comes into force in 2013, obliges designated foreign financial institutions to report on the banking activities of any customers who have US citizenship. FATCA will be an anti-tax avoidance regime with some similarities to anti-money laundering laws, but its reporting requirements go much further than the AML rules, according to Deloitte's global leader for FATCA, Denise Hintzke."FATCA requires financial institutions to go behind the corporate veil and find out whether a company or trust is owned or controlled by US citizens," Hintzke said."It also requires that institutions go beyond the account level and report on all assets held placed with the institution by a US citizen."Hintzke, who is based in the US, is in Australia this week to meet with local Deloitte partners and clients to brief them on FATCA developments.The purpose of the law is to identify US citizens who are using offshore banking and investment accounts to avoid tax. It covers banks, insurance companies, fund managers, private equity companies, custodians and trustee companies.Designated institutions must report back to the US Internal Revenue Service, and their reporting is subject to audit.Technically, the application of the law to financial institutions licensed outside the US is voluntary, but the US will apply sanctions to institutions it knows to be harbouring US tax-avoiders. The sanction takes the form of a 30 per cent withholding tax on US-sourced payments to those institutions.Deloitte financial services' partner, Graham Dillon, said a complication for Australian financial institutions was that the reporting requirements will breach the Privacy Act, which imposes restrictions on sending customer details offshore.Dillon said: "Banks will have to get waivers from their customers if they are going to comply with FATCA reporting requirements."