Australian finance sector bodies lobbying for exemptions from the US Foreign Account Tax Compliance Act are unlikely to make any gains, according to a leading FATCA consultant.The new law, which was passed last year, obliges foreign financial institutions to report to the US Internal Revenue Service on the banking activities of any customers who have US citizenship. It comes into effect in 2013. Institutions have to enter into what are called FFI Agreements with the IRS by June next year.FATCA is an anti-tax avoidance regime. It aims to stop tax abuses by US citizens holding overseas bank and investment accounts. It has some similarities to anti-money laundering law but its reporting requirements go much further than the AML/CTF 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."Institutions that enter into FFI Agreements will have to be ready to report on new accounts from the date of the agreement and will have to report on existing accounts from December 2014.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.Foreign financial institutions will have to withhold 30 per cent of pass-though payments made to US account holders who refuse to allow their account information to be supplied to the IRS.Financial institutions will also have to impose withholding tax on payments out of the US to any financial institution that does not have an FFI agreement. Hintzke said the rationale for this is that the IRS is not able to determine whether such payments to non-participating financial institutions are going into accounts held by US citizens. She said this rule would force most financial institutions to seek FFI Agreements.Deloitte financial services partner Graham Dillon said managing FATCA obligations would be difficult for local banks because of the conflict between the reporting requirements and the Privacy Act.And Australia's real-time gross payment settlement system does not include an interface that would allow for the withholding tax to be extracted from a payment going though the system.