The temporary injunction imposed by the Israeli High Court against the Foreign Account Tax Compliance Act (FATCA), should act as a wake-up call for other countries to rethink enforcing this toxic piece of legislation.

On Wednesday, Israel’s High Court of Justice threw a spanner into the government’s plans to actively implement FATCA in the country.

Just days before the government’s process was due to start rolling, Justice Hanan Meltzer ordered officials to stop the preparatory work, and an emergency hearing is scheduled to be held on the matter before 15th September.

FATCA, a highly-flawed law, obliges all non-U.S. financial institutions across the globe to report the financial information of American clients and U.S. green card holders, who hold bank accounts with more than $50,000, to the United States directly.

As such, it is my view than Justice Meltzer’s action should be advocated.  His caution should certainly act as a wake-up call for other countries to follow suit, and consider rethinking plans to implement FATCA being imposed on sovereign states around the world by the U.S.

Indeed, there are key questions that must be raised regarding the imperialistic nature of FATCA.

Should countries of foreign financial institutions not comply with FATCA, they will face hefty penalties.  They are, in effect, being strong-armed into complying with the sovereignty-violating, costly, onerous, privacy-infringing regulations set by America.

The principal objective of FATCA is to catch tax evaders who hide money offshore.  Quite the honourable aim.

However, it is impossible for FATCA to successfully tackle this critically important global issue, due to its untargeted approach.

Therefore, because of a whole host of grave, unintended, adverse consequences, FATCA brands the 7 million Americans who choose to live and/or work abroad as financial pariahs.

As a direct result of FATCA, U.S. expats are being rejected from FFIs in their country of residence, because the expensive burdensome regulations associated with the law, means these American clients are considered more trouble than they’re worth.

In the same vein, because of FATCA, American businesses operating in international markets are being treated with an almost leprosy-like status.  Of course, this will batter global competitiveness, and quite possibly, hit American jobs and the growth of the U.S. economy hard, in the long-term.

Naturally, this would then have far-reaching implications, way beyond America.

I sincerely hope that the gallant action taken by Justice Meltzer will encourage other influential people across the world to reconsider FATCA.  Indeed, this move undertaken by Israel’s High Court of Justice could be a breakthrough moment within the fight to repeal this highly-controversial, detrimental law.

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