The U.S. Treasury Department and Mexico’s Ministry of Finance have struck a bilateral agreement to implement the Foreign Account Tax Compliance Act requiring financial institutions to report the holdings of U.S. and Mexican taxpayers to each other’s tax authorities.

The agreement implements the provisions of FATCA, which was included as part of the HIRE Act of 2010. The law, which has provoked controversy abroad, requires foreign financial institutions, including hedge funds, to report on the holdings of U.S. taxpayers to the IRS, or face stiff penalties. To help ease concerns abroad, the Treasury Department has been striking agreements with foreign governments to require U.S. banks to report on the holdings of foreign taxpayers to their countries’ tax authorities.

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