Timeline 2010

The year 2010 is characterized by the aftermath of the global financial crisis 2008–2009 and a breakthrough in international tax transparency:

• FATCA (March 2010): The Foreign Account Tax Compliance Act requires foreign financial institutions worldwide to report US accounts – a paradigm shift in international tax cooperation
• Dodd-Frank Act (July 2010): Comprehensive US financial market reform following the financial crisis, regulating derivatives, too-big-to-fail, and consumer protection
• Basel III (December 2010): The Basel Committee publishes the new capital and liquidity framework in response to the banking crisis
• EU Financial Supervision Reform (November 2010): The EU establishes the ESRB and the three European Supervisory Authorities (EBA, ESMA, EIOPA) in response to the financial crisis

The global financial crisis 2007–2009 had revealed systemic weaknesses in international finance. At the political level, G20 nations responded with a coordinated reform agenda.

The Hiring Incentives to Restore Employment (HIRE) Act of March 18, 2010 contained FATCA as Subtitle A of Title V. The law aimed to combat US tax losses from offshore evasion: foreign financial institutions (FFIs) were required to report account information of US persons to the IRS or suffer a 30% withholding tax on US payments. This triggered a wave of bilateral IGA negotiations.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (July 2010) was the most far-reaching US financial market reform since the financial market reforms of the 1930s. It created the Consumer Financial Protection Bureau (CFPB), regulated the OTC derivatives market, and introduced the Volcker Rule.

The Basel Committee published Basel III in December 2010, raising minimum capital requirements, introducing a leverage ratio, and for the first time mandating liquidity ratios (LCR, NSFR).

In parallel, the European Union responded to the crisis with a comprehensive reform of financial supervision. In June 2010, the European Financial Stability Facility (EFSF) was established as a temporary rescue mechanism for the eurozone. In November 2010, the EU adopted Regulations No. 1092–1095/2010, creating the European Systemic Risk Board (ESRB) for macroprudential oversight and three new European Supervisory Authorities: the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA), and the European Insurance and Occupational Pensions Authority (EIOPA).

The regulatory innovations of 2010 affected:

• FATCA: All foreign financial institutions with US clients or US securities
• Dodd-Frank: US banks, derivatives dealers, rating agencies, consumer lenders
• Basel III: Internationally active banks in BCBS member states
• EU Supervisory Reform: Financial institutions, insurance companies, and securities markets in the EU, systemically important institutions under ESRB oversight

• FATCA FFI Agreements: Registration with the IRS, reporting US account holders or accepting 30% withholding tax
• Dodd-Frank Section 716: Separation of certain derivatives activities from FDIC-insured banks
• Volcker Rule (Section 619): Prohibition of proprietary trading for banks, restrictions on hedge fund investments
• Basel III: CET1 minimum ratio 4.5%, capital conservation buffer 2.5%, LCR ≥ 100%

1 correction:
- G20 Seoul Summit: Wrong date November 1 instead of November 11-12, 2010
2 updates:
- Volcker Rule: Dodd-Frank Section 619 not identified as source
- EU financial reforms of 2010 missing despite 'Global' jurisdiction
2 clarifications.