Tax News
SIFMA asks Treasury to Resolve FATCA “Self-certification” FAQ 10 Confusion
March 31, 2015
The Securities Industry and Financial Markets Association (“SIFMA”) recently sent a comment to the U.S. Department of the Treasury asking for clarification regarding the following issue: Can FFIs residing in IGA 1 or 2 countries open an account as a U.S. reportable account for an investor who does not provide FATCA self-certification to the FFI? Currently FAQ 10 of the general compliance FAQ guidance (found here) provides a resounding NO.  Pursuant to section III, paragraph B, of Annex I of the IGA, the FFI must obtain a self-certification at account opening.  If the FFI cannot obtain a self-certification at account opening, it cannot open the account.  SIFMA points out, however, that some local jurisdiction FATCA enabling legislation is inconsistent with the FAQ. The legislation expressly allows the onboarding of an investor as a U.S. reportable account. SIFMA gives an example of the UK and Canada legislations which specifically does not require an FFI (or a USFI) to refuse to open or close a new individual account in the event the FFI is unable to obtain self-certification. Instead, under the UK and Canadian guidance, FIs are instructed to treat such accounts as reportable accounts.

What SIFMA astutely notices is that this inconsistence could lead to competitive disadvantage for those FFIs (or USFIs) who are required to follow the more restrictive rule.  Also, the inconsistence places FFIs in a position where they are not entirely sure which rule to follow. Thus, SIFMA recommends that the competent authorities of the relevant jurisdictions should meet to resolve this disagreement and, if necessary, amend the relevant provisions of the IGAs as appropriate. Time will tell whether Treasury will heed the comment, which could be found here.
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Tags: FATCA faq 10, FATCA self-certification, SIFMA and FATCA