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Treasury Updates Annex I of Model 2 IGA

NOV. 30, 2014

Treasury Updates Annex I of Model 2 IGA

DATED NOV. 30, 2014
DOCUMENT ATTRIBUTES
ANNEX I DUE DILIGENCE OBLIGATIONS FOR IDENTIFYING AND REPORTING ON U.S. ACCOUNTS AND ON PAYMENTS TO CERTAIN NONPARTICIPATING FINANCIAL INSTITUTIONS

I. General.

 

A. Reporting [FATCA Partner] Financial Institutions must identify U.S. Accounts and accounts held by Nonparticipating Financial Institutions in accordance with the due diligence procedures contained in this Annex I.

B. For purposes of the Agreement,

 

1. All dollar amounts are in U.S. dollars and shall be read to include the equivalent in other currencies.

2. Except as otherwise provided herein, the balance or value of an account shall be determined as of the last day of the calendar year, or in the case of a Cash Value Insurance Contract or an Annuity Contract, as of the last day of the calendar year or the most recent contract anniversary date.

3. Subject to subparagraph E(1) of section II of this Annex I, an account shall be treated as a U.S. Account beginning as of the date it is identified as such pursuant to the due diligence procedures in this Annex I.

4. Unless otherwise provided, information with respect to a U.S. Account must be reported annually in the calendar year following the year to which the information relates.

 

C. As an alternative to the procedures described in each section of this Annex I, Reporting [FATCA Partner] Financial Institutions may rely on the procedures described in relevant U.S. Treasury Regulations to establish whether an account is a U.S. Account or an account held by a Nonparticipating Financial Institution, except that if an account is treated as held by a recalcitrant account holder under procedures described in relevant U.S. Treasury Regulations, such account shall be treated as a U.S. Account for purposes of this Agreement. Reporting [FATCA Partner] Financial Institutions may make such election separately for each section of this Annex I either with respect to all relevant Financial Accounts or, separately, with respect to any clearly identified group of such accounts (such as by line of business or the location of where the account is maintained). Except as otherwise provided in an FFI Agreement, once a Reporting [FATCA Partner] Financial Institution has chosen to rely on the procedures in relevant U.S. Treasury Regulations with respect to any group of accounts, such Reporting [FATCA Partner] Financial Institution must continue to apply such procedures consistently in all subsequent years, unless there has been a material modification to relevant U.S. Treasury Regulations.

 

II. Preexisting Individual Accounts. The following rules and procedures apply for purposes of identifying U.S. Accounts among Preexisting Accounts held by individuals ("Preexisting Individual Accounts").

 

A. Accounts Not Required to Be Reviewed, Identified, or Reported. Unless the Reporting [FATCA Partner] Financial Institution elects otherwise, either with respect to all Preexisting Individual Accounts or, separately, with respect to any clearly identified group of such accounts, the following Preexisting Individual Accounts are not required to be reviewed, identified, or reported as U.S. Accounts:

 

1. Subject to subparagraph E(2) of this section, a Preexisting Individual Account with a balance or value that does not exceed $50,000 as of the Determination Date.

2. Subject to subparagraph E(2) of this section, a Preexisting Individual Account that is a Cash Value Insurance Contract or an Annuity Contract with a balance or value of $250,000 or less as of the Determination Date.

3. A Preexisting Individual Account that is a Cash Value Insurance Contract or an Annuity Contract, provided the law or regulations of [FATCA Partner] or the United States effectively prevent the sale of such a Cash Value Insurance Contract or an Annuity Contract to U.S. residents (e.g., if the relevant Financial Institution does not have the required registration under U.S. law, and the law of [FATCA Partner] requires reporting or withholding with respect to insurance products held by residents of [FATCA Partner]).

4. A Depository Account with a balance of $50,000 or less.

 

B. Review Procedures for Preexisting Individual Accounts With a Balance or Value as of the Determination Date, that Exceeds $50,000 ($250,000 for a Cash Value Insurance Contract or Annuity Contract), But Does Not Exceed $1,000,000 ("Lower Value Accounts").

 

1. Electronic Record Search. The Reporting [FATCA Partner] Financial Institution must review electronically searchable data maintained by the Reporting [FATCA Partner] Financial Institution for any of the following U.S. indicia:

 

a) Identification of the Account Holder as a U.S. citizen or resident;

b) Unambiguous indication of a U.S. place of birth;

c) Current U.S. mailing or residence address (including a U.S. post office box);

d) Current U.S. telephone number;

e) Standing instructions to transfer funds to an account maintained in the United States;

f) Currently effective power of attorney or signatory authority granted to a person with a U.S. address; or

g) An "in-care-of" or "hold mail" address that is the sole address the Reporting [FATCA Partner] Financial Institution has on file for the Account Holder. In the case of a Preexisting Individual Account that is a Lower Value Account, an "in-care-of" address outside the United States or "hold mail" address shall not be treated as U.S. indicia.

 

2. If none of the U.S. indicia listed in subparagraph B(1) of this section are discovered in the electronic search, then no further action is required until there is a change in circumstances that results in one or more U.S. indicia being associated with the account, or the account becomes a High Value Account described in paragraph D of this section.

3. If any of the U.S. indicia listed in subparagraph B(1) of this section are discovered in the electronic search, or if there is a change in circumstances that results in one or more U.S. indicia being associated with the account, then the Reporting [FATCA Partner] Financial Institution must treat the account as a U.S. Account unless it elects to apply subparagraph B(4) of this section and one of the exceptions in such subparagraph applies with respect to that account.

4. Notwithstanding a finding of U.S. indicia under subparagraph B(1) of this section, a Reporting [FATCA Partner] Financial Institution is not required to treat an account as a U.S. Account if:

 

a) Where the Account Holder information unambiguously indicates a U.S. place of birth, the Reporting [FATCA Partner] Financial Institution obtains, or has previously reviewed and maintains a record of:

 

(1) A self-certification that the Account Holder is neither a U.S. citizen nor a U.S. resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form);

(2) A non-U.S. passport or other government-issued identification evidencing the Account Holder's citizenship or nationality in a country other than the United States; and

(3) A copy of the Account Holder's Certificate of Loss of Nationality of the United States or a reasonable explanation of:

 

(a) The reason the Account Holder does not have such a certificate despite relinquishing U.S. citizenship; or

(b) The reason the Account Holder did not obtain U.S. citizenship at birth.

b) Where the Account Holder information contains a current U.S. mailing or residence address, or one or more U.S. telephone numbers that are the only telephone numbers associated with the account, the Reporting [FATCA Partner] Financial Institution obtains, or has previously reviewed and maintains a record of:

 

(1) A self-certification that the Account Holder is neither a U.S. citizen nor a U.S. resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form); and

(2) Documentary evidence, as defined in paragraph D of section VI of this Annex I, establishing the Account Holder's non-U.S. status.

 

c) Where the Account Holder information contains standing instructions to transfer funds to an account maintained in the United States, the Reporting [FATCA Partner] Financial Institution obtains, or has previously reviewed and maintains a record of:

 

(1) A self-certification that the Account Holder is neither a U.S. citizen nor a U.S. resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form); and

(2) Documentary evidence, as defined in paragraph D of section VI of this Annex I, establishing the Account Holder's non-U.S. status.

 

d) Where the Account Holder information contains a currently effective power of attorney or signatory authority granted to a person with a U.S. address, has an "in-care-of" address or "hold mail" address that is the sole address identified for the Account Holder, or has one or more U.S. telephone numbers (if a non-U.S. telephone number is also associated with the account), the Reporting [FATCA Partner] Financial Institution obtains, or has previously reviewed and maintains a record of:

 

(1) A self-certification that the Account Holder is neither a U.S. citizen nor a U.S. resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form); or

(2) Documentary evidence, as defined in paragraph D of section VI of this Annex I, establishing the Account Holder's non-U.S. status.

C. Additional Procedures Applicable to Preexisting Individual Accounts That Are Lower Value Accounts.

 

1. Review of Preexisting Individual Accounts that are Lower Value Accounts for U.S. indicia must be completed within two years from the Determination Date.

2. If there is a change of circumstances with respect to a Preexisting Individual Account that is a Lower Value Account that results in one or more U.S. indicia described in subparagraph B(1) of this section being associated with the account, then the Reporting [FATCA Partner] Financial Institution must treat the account as a U.S. Account unless subparagraph B(4) of this section applies.

3. Except for Depository Accounts described in subparagraph A(4) of this section, any Preexisting Individual Account that has been identified as a U.S. Account under this section shall be treated as a U.S. Account in all subsequent years, unless the Account Holder ceases to be a Specified U.S. Person.

 

D. Enhanced Review Procedures for Preexisting Individual Accounts With a Balance or Value That Exceeds $1,000,000 as of the Determination Date , or December 31 of 2015 or Any Subsequent Year ("High Value Accounts").

 

1. Electronic Record Search. The Reporting [FATCA Partner] Financial Institution must review electronically searchable data maintained by the Reporting [FATCA Partner] Financial Institution for any of the U.S. indicia described in subparagraph B(1) of this section.

2. Paper Record Search. If the Reporting [FATCA Partner] Financial Institution's electronically searchable databases include fields for, and capture all of the information described in, subparagraph D(3) of this section, then no further paper record search is required. If the electronic databases do not capture all of this information, then with respect to a High Value Account, the Reporting [FATCA Partner] Financial Institution must also review the current customer master file and, to the extent not contained in the current customer master file, the following documents associated with the account and obtained by the Reporting [FATCA Partner] Financial Institution within the last five years for any of the U.S. indicia described in subparagraph B(1) of this section:

 

a) The most recent documentary evidence collected with respect to the account;

b) The most recent account opening contract or documentation;

c) The most recent documentation obtained by the Reporting [FATCA Partner] Financial Institution pursuant to AML/KYC Procedures or for other regulatory purposes;

d) Any power of attorney or signature authority forms currently in effect; and

e) Any standing instructions to transfer funds currently in effect.

 

3. Exception Where Databases Contain Sufficient Information. A Reporting [FATCA Partner] Financial Institution is not required to perform the paper record search described in subparagraph D(2) of this section if the Reporting [FATCA Partner] Financial Institution's electronically searchable information includes the following:

 

a) The Account Holder's nationality or residence status;

b) The Account Holder's residence address and mailing address currently on file with the Reporting [FATCA Partner] Financial Institution;

c) The Account Holder's telephone number(s) currently on file, if any, with the Reporting [FATCA Partner] Financial Institution;

d) Whether there are standing instructions to transfer funds in the account to another account (including an account at another branch of the Reporting [FATCA Partner] Financial Institution or another Financial Institution);

e) Whether there is a current "in-care-of" address or "hold mail" address for the Account Holder; and

f) Whether there is any power of attorney or signatory authority for the account.

 

4. Relationship Manager Inquiry for Actual Knowledge. In addition to the electronic and paper record searches described above, the Reporting [FATCA Partner] Financial Institution must treat as a U.S. Account any High Value Account assigned to a relationship manager (including any Financial Accounts aggregated with such High Value Account) if the relationship manager has actual knowledge that the Account Holder is a Specified U.S. Person.

5. Effect of Finding U.S. Indicia.

 

a) If none of the U.S. indicia listed in subparagraph B(1) of this section are discovered in the enhanced review of High Value Accounts described above, and the account is not identified as held by a Specified U.S. Person in subparagraph D(4) of this section, then no further action is required until there is a change in circumstances that results in one or more U.S. indicia being associated with the account.

b) If any of the U.S. indicia listed in subparagraph B(1) of this section are discovered in the enhanced review of High Value Accounts described above, or if there is a subsequent change in circumstances that results in one or more U.S. indicia being associated with the account, then the Reporting [FATCA Partner] Financial Institution must treat the account as a U.S. Account unless it elects to apply subparagraph B(4) of this section and one of the exceptions in such subparagraph applies with respect to that account.

c) Except for Depository Accounts described in subparagraph A(4) of this section, any Preexisting Individual Account that has been identified as a U.S. Account under this section shall be treated as a U.S. Account in all subsequent years, unless the Account Holder ceases to be a Specified U.S. Person.

E. Additional Procedures Applicable to High Value Accounts.

 

1. If a Preexisting Individual Account is a High Value Account as of the Determination Date, the Reporting [FATCA Partner] Financial Institution must complete the enhanced review procedures described in paragraph D of this section with respect to such account within one year from the Determination Date. If based on this review such account is identified as a U.S. Account on or before December 31, 2014, the Reporting [FATCA Partner] Financial Institution must report the required information about such account with respect to 2014 in the first report on the account and on an annual basis thereafter. In the case of an account identified as a U.S. Account after December 31, 2014, the Reporting [FATCA Partner] Financial Institution is not required to report information about such account with respect to 2014, but must report information about the account on an annual basis thereafter.

2. If a Preexisting Individual Account is not a High Value Account as of the Determination Date, but becomes a High Value Account as of the last day of 2015 or any subsequent calendar year, the Reporting [FATCA Partner] Financial Institution must complete the enhanced review procedures described in paragraph D of this section with respect to such account within six months after the last day of the calendar year in which the account becomes a High Value Account. If based on this review such account is identified as a U.S. Account, the Reporting [FATCA Partner] Financial Institution must report the required information about such account with respect to the year in which it is identified as a U.S. Account and subsequent years on an annual basis, unless the Account Holder ceases to be a Specified U.S. Person.

3. Once a Reporting [FATCA Partner] Financial Institution applies the enhanced review procedures described in paragraph D of this section to a High Value Account, the Reporting [FATCA Partner] Financial Institution is not required to re-apply such procedures, other than the relationship manager inquiry described in subparagraph D(4) of this section, to the same High Value Account in any subsequent year.

4. If there is a change of circumstances with respect to a High Value Account that results in one or more U.S. indicia described in subparagraph B(1) of this section being associated with the account, then the Reporting [FATCA Partner] Financial Institution must treat the account as a U.S. Account unless it elects to apply subparagraph B(4) of this section and one of the exceptions in such subparagraph applies with respect to that account.

5. A Reporting [FATCA Partner] Financial Institution must implement procedures to ensure that a relationship manager identifies any change in circumstances of an account. For example, if a relationship manager is notified that the Account Holder has a new mailing address in the United States, the Reporting [FATCA Partner] Financial Institution is required to treat the new address as a change in circumstances and, if it elects to apply subparagraph B(4) of this section, is required to obtain the appropriate documentation from the Account Holder.

 

F. Preexisting Individual Accounts That Have Been Documented for Certain Other Purposes. A Reporting [FATCA Partner] Financial Institution that has previously obtained documentation from an Account Holder to establish the Account Holder's status as neither a U.S. citizen nor a U.S. resident in order to meet its obligations under a qualified intermediary, withholding foreign partnership, or withholding foreign trust agreement with the IRS, or to fulfill its obligations under chapter 61 of Title 26 of the United States Code, is not required to perform the procedures described in subparagraph B(1) of this section with respect to Lower Value Accounts or subparagraphs D(1) through D(3) of this section with respect to High Value Accounts.

 

III. New Individual Accounts. The following rules and procedures apply for purposes of identifying U.S. Accounts among Financial Accounts held by individuals and opened after the Determination Date ("New Individual Accounts").

 

A. Accounts Not Required to Be Reviewed, Identified, or Reported. Unless the Reporting [FATCA Partner] Financial Institution elects otherwise, either with respect to all New Individual Accounts or, separately, with respect to any clearly identified group of such accounts, the following New Individual Accounts are not required to be reviewed, identified, or reported as U.S. Accounts:

 

1. A Depository Account unless the account balance exceeds $50,000 at the end of any calendar year.

2. A Cash Value Insurance Contract unless the cash value exceeds $50,000 at the end of any calendar year.

 

B. Other New Individual Accounts. With respect to New Individual Accounts not described in paragraph A of this section, upon account opening (or within 90 days after the end of the calendar year in which the account ceases to be described in paragraph A of this section), the Reporting [FATCA Partner] Financial Institution must obtain a self-certification, which may be part of the account opening documentation, that allows the Reporting [FATCA Partner] Financial Institution to determine whether the Account Holder is resident in the United States for tax purposes (for this purpose, a U.S. citizen is considered to be resident in the United States for tax purposes, even if the Account Holder is also a tax resident of another jurisdiction) and confirm the reasonableness of such self-certification based on the information obtained by the Reporting [FATCA Partner] Financial Institution in connection with the opening of the account, including any documentation collected pursuant to AML/KYC Procedures.

 

1. If the self-certification establishes that the Account Holder is resident in the United States for tax purposes, the Reporting [FATCA Partner] Financial Institution must treat the account as a U.S. Account and obtain a self-certification that includes the Account Holder's U.S. TIN (which may be an IRS Form W-9 or other similar agreed form).

2. If there is a change of circumstances with respect to a New Individual Account that causes the Reporting [FATCA Partner] Financial Institution to know, or have reason to know, that the original self-certification is incorrect or unreliable, the Reporting [FATCA Partner] Financial Institution cannot rely on the original self-certification and must obtain a valid self-certification that establishes whether the Account Holder is a U.S. citizen or resident for U.S. tax purposes. If the Reporting [FATCA Partner] Financial Institution is unable to obtain a valid self-certification, the Reporting [FATCA Partner] Financial Institution must treat the account as a Non-Consenting U.S. Account.

IV. Preexisting Entity Accounts. The following rules and procedures apply for purposes of identifying U.S. Accounts and accounts held by Nonparticipating Financial Institutions among Preexisting Accounts held by Entities ("Preexisting Entity Accounts").

 

A. Entity Accounts Not Required to Be Reviewed, Identified, or Reported. Unless the Reporting [FATCA Partner] Financial Institution elects otherwise, either with respect to all Preexisting Entity Accounts or, separately, with respect to any clearly identified group of such accounts, a Preexisting Entity Account with an account balance or value that does not exceed $250,000 as of the Determination Date, is not required to be reviewed, identified, or reported as a U.S. Account until the account balance or value exceeds $1,000,000.

B. Entity Accounts Subject to Review. A Preexisting Entity Account that has an account balance or value that exceeds $250,000 as of the Determination Date, and a Preexisting Entity Account that does not exceed $250,000 as of the Determination Date but the account balance or value of which exceeds $1,000,000 as of the last day of 2015 or any subsequent calendar year, must be reviewed in accordance with the procedures set forth in paragraph D of this section.

C. Entity Accounts With Respect to Which Reporting Is Required. With respect to Preexisting Entity Accounts described in paragraph B of this section, only accounts that are held by one or more Entities that are Specified U.S. Persons, or by Passive NFFEs with one or more Controlling Persons who are U.S. citizens or residents, shall be treated as U.S. Accounts. In addition, accounts held by Nonparticipating Financial Institutions shall be treated as accounts for which aggregate payments are required to be reported under an FFI Agreement.

D. Review Procedures for Identifying Entity Accounts With Respect to Which Reporting Is Required. For Preexisting Entity Accounts described in paragraph B of this section, the Reporting [FATCA Partner] Financial Institution must apply the following review procedures to determine whether the account is held by one or more Specified U.S. Persons, by Passive NFFEs with one or more Controlling Persons who are U.S. citizens or residents, or by Nonparticipating Financial Institutions:

 

1. Determine Whether the Entity Is a Specified U.S. Person.

 

a) Review information maintained for regulatory or customer relationship purposes (including information collected pursuant to AML/KYC Procedures) to determine whether the information indicates that the Account Holder is a U.S. Person. For this purpose, information indicating that the Account Holder is a U.S. Person includes a U.S. place of incorporation or organization, or a U.S. address.

b) If the information indicates that the Account Holder is a U.S. Person, the Reporting [FATCA Partner] Financial Institution must treat the account as a U.S. Account unless it obtains a self-certification from the Account Holder (which may be on an IRS Form W-8 or W-9, or a similar agreed form), or reasonably determines based on information in its possession or that is publicly available, that the Account Holder is not a Specified U.S. Person.

 

2. Determine Whether a Non-U.S. Entity Is a Financial Institution.

 

a) Review information maintained for regulatory or customer relationship purposes (including information collected pursuant to AML/KYC Procedures) to determine whether the information indicates that the Account Holder is a Financial Institution.

b) If the information indicates that the Account Holder is a Financial Institution, or the Reporting [FATCA Partner] Financial Institution verifies the Account Holder's Global Intermediary Identification Number on the published IRS FFI list, then the account is not a U.S. Account.

 

3. Determine Whether a Financial Institution Is a Nonparticipating Financial Institution Payments to Which Are Subject to Aggregate Reporting Consistent with the Requirements of an FFI Agreement.

 

a) Subject to subparagraph D(3)(b) of this section, a Reporting [FATCA Partner] Financial Institution may determine that the Account Holder is a [FATCA Partner] Financial Institution or other Partner Jurisdiction Financial Institution if the Reporting [FATCA Partner] Financial Institution reasonably determines that the Account Holder has such status on the basis of the Account Holder's Global Intermediary Identification Number on the published IRS FFI list or other information that is publicly available or in the possession of the Reporting [FATCA Partner] Financial Institution, as applicable. In such case, no further review, identification, or reporting is required with respect to the account.

b) If the Account Holder is a [FATCA Partner] Financial Institution or other Partner Jurisdiction Financial Institution treated by the IRS as a Nonparticipating Financial Institution, then the account is not a U.S. Account, but payments to the Account Holder must be reported consistent with the requirements of an FFI Agreement.

c) If the Account Holder is not a [FATCA Partner] Financial Institution or other Partner Jurisdiction Financial Institution, then the Reporting [FATCA Partner] Financial Institution must treat the Account Holder as a Nonparticipating Financial Institution payments to which are reportable consistent with the requirements of an FFI Agreement, unless the Reporting [FATCA Partner] Financial Institution:

 

(1) Obtains a self-certification (which may be on an IRS Form W-8 or similar agreed form) from the Account Holder that it is a certified deemed-compliant FFI, or an exempt beneficial owner, as those terms are defined in relevant U.S. Treasury Regulations; or

(2) In the case of a participating FFI or registered deemed-compliant FFI, verifies the Account Holder's Global Intermediary Identification Number on the published IRS FFI list.

4. Determine Whether an Account Held by an NFFE Is a U.S. Account. With respect to an Account Holder of a Preexisting Entity Account that is not identified as either a U.S. Person or a Financial Institution, the Reporting [FATCA Partner] Financial Institution must identify (i) whether the Account Holder has Controlling Persons, (ii) whether the Account Holder is a Passive NFFE, and (iii) whether any of the Controlling Persons of the Account Holder is a U.S. citizen or resident. In making these determinations the Reporting [FATCA Partner] Financial Institution must follow the guidance in subparagraphs D(4)(a) through D(4)(d) of this section in the order most appropriate under the circumstances.

 

a) For purposes of determining the Controlling Persons of an Account Holder, a Reporting [FATCA Partner] Financial Institution may rely on information collected and maintained pursuant to AML/KYC Procedures.

b) For purposes of determining whether the Account Holder is a Passive NFFE, the Reporting [FATCA Partner] Financial Institution must obtain a self-certification (which may be on an IRS Form W-8 or W-9, or on a similar agreed form) from the Account Holder to establish its status, unless it has information in its possession or that is publicly available, based on which it can reasonably determine that the Account Holder is an Active NFFE.

c) For purposes of determining whether a Controlling Person of a Passive NFFE is a U.S. citizen or resident for tax purposes, a Reporting [FATCA Partner] Financial Institution may rely on:

 

(1) Information collected and maintained pursuant to AML/KYC Procedures in the case of a Preexisting Entity Account held by one or more NFFEs with an account balance or value that does not exceed $1,000,000; or

(2) A self-certification (which may be on an IRS Form W-8 or W-9, or on a similar agreed form) from the Account Holder or such Controlling Person in the case of a Preexisting Entity Account held by one or more NFFEs with an account balance or value that exceeds $1,000,000.

 

d) If any Controlling Person of a Passive NFFE is a U.S. citizen or resident, the account shall be treated as a U.S. Account.
E. Timing of Review and Additional Procedures Applicable to Preexisting Entity Accounts.

 

1. Review of Preexisting Entity Accounts with an account balance or value that exceeds $250,000 as of the Determination Date must be completed within two years from the Determination Date.

2. Review of Preexisting Entity Accounts with an account balance or value that does not exceed $250,000 as of the Determination Date, but exceeds $1,000,000 as of December 31 of 2015 or any subsequent year, must be completed within six months after the last day of the calendar year in which the account balance or value exceeds $1,000,000.

3. If there is a change of circumstances with respect to a Preexisting Entity Account that causes the Reporting [FATCA Partner] Financial Institution to know, or have reason to know, that the self-certification or other documentation associated with an account is incorrect or unreliable, the Reporting [FATCA Partner] Financial Institution must redetermine the status of the account in accordance with the procedures set forth in paragraph D of this section.

V. New Entity Accounts. The following rules and procedures apply for purposes of identifying U.S. Accounts and accounts held by Nonparticipating Financial Institutions among Financial Accounts held by Entities and opened after the Determination Date ("New Entity Accounts").

 

A. Entity Accounts Not Required to Be Reviewed, Identified or Reported. Unless the Reporting [FATCA Partner] Financial Institution elects otherwise, either with respect to all New Entity Accounts or, separately, with respect to any clearly identified group of such accounts, a credit card account or a revolving credit facility treated as a New Entity Account is not required to be reviewed, identified, or reported, provided that the Reporting [FATCA Partner] Financial Institution maintaining such account implements policies and procedures to prevent an account balance owed to the Account Holder that exceeds $50,000.

B. Other New Entity Accounts. With respect to New Entity Accounts not described in paragraph A of this section, the Reporting [FATCA Partner] Financial Institution must determine whether the Account Holder is: (i) a Specified U.S. Person; (ii) a [FATCA Partner] Financial Institution or other Partner Jurisdiction Financial Institution; (iii) a participating FFI, a deemed-compliant FFI, or an exempt beneficial owner, as those terms are defined in relevant U.S. Treasury Regulations; or (iv) an Active NFFE or Passive NFFE.

 

1. Subject to subparagraph B(2) of this section, a Reporting [FATCA Partner] Financial Institution may determine that the Account Holder is an Active NFFE, a [FATCA Partner] Financial Institution, or other Partner Jurisdiction Financial Institution if the Reporting [FATCA Partner] Financial Institution reasonably determines that the Account Holder has such status on the basis of the Account Holder's Global Intermediary Identification Number or other information that is publicly available or in the possession of the Reporting [FATCA Partner] Financial Institution, as applicable.

2. If the Account Holder is a [FATCA Partner] Financial Institution or other Partner Jurisdiction Financial Institution treated by the IRS as a Nonparticipating Financial Institution, then the account is not a U.S. Account, but payments to the Account Holder must be reported consistent with the requirements of an FFI Agreement.

3. In all other cases, a Reporting [FATCA Partner] Financial Institution must obtain a self-certification from the Account Holder to establish the Account Holder's status. Based on the self-certification, the following rules apply:

 

a) If the Account Holder is a Specified U.S. Person, the Reporting [FATCA Partner] Financial Institution must treat the account as a U.S. Account.

b) If the Account Holder is a Passive NFFE, the Reporting [FATCA Partner] Financial Institution must identify the Controlling Persons as determined under AML/KYC Procedures, and must determine whether any such person is a U.S. citizen or resident on the basis of a self-certification from the Account Holder or such person. If any such person is a U.S. citizen or resident, the Reporting [FATCA Partner] Financial Institution must treat the account as a U.S. Account.

c) If the Account Holder is: (i) a U.S. Person that is not a Specified U.S. Person; (ii) subject to subparagraph B(3)(d) of this section, a [FATCA Partner] Financial Institution or other Partner Jurisdiction Financial Institution; (iii) a participating FFI, a deemed-compliant FFI, or an exempt beneficial owner, as those terms are defined in relevant U.S. Treasury Regulations; (iv) an Active NFFE; or (v) a Passive NFFE none of the Controlling Persons of which is a U.S. citizen or resident, then the account is not a U.S. Account, and no reporting is required with respect to the account.

d) If the Account Holder is a Nonparticipating Financial Institution (including a [FATCA Partner] Financial Institution or other Partner Jurisdiction Financial Institution treated by the IRS as a Nonparticipating Financial Institution), then the account is not a U.S. Account, but payments to the Account Holder must be reported consistent with the requirements of an FFI Agreement.

VI. Special Rules and Definitions. The following additional rules and definitions apply in implementing the due diligence procedures described above:

 

A. Reliance on Self-Certifications and Documentary Evidence. A Reporting [FATCA Partner] Financial Institution may not rely on a self-certification or documentary evidence if the Reporting [FATCA Partner] Financial Institution knows or has reason to know that the self-certification or documentary evidence is incorrect or unreliable.

B. Definitions. The following definitions apply for purposes of this Annex I.

 

1. AML/KYC Procedures. "AML/KYC Procedures" means the customer due diligence procedures of a Reporting [FATCA Partner] Financial Institution pursuant to the anti-money laundering or similar requirements of [FATCA Partner] to which such Reporting [FATCA Partner] Financial Institution is subject.

2. NFFE. An "NFFE" means any Non-U.S. Entity that is not an FFI as defined in relevant U.S. Treasury Regulations or is an Entity described in subparagraph B(4)(j) of this section, and also includes any Non-U.S. Entity that is established in [FATCA Partner] or another Partner Jurisdiction and that is not a Financial Institution.

3. Passive NFFE. A "Passive NFFE" means any NFFE that is not (i) an Active NFFE, or (ii) a withholding foreign partnership or withholding foreign trust pursuant to relevant U.S. Treasury Regulations.

4. Active NFFE. An "Active NFFE" means any NFFE that meets any of the following criteria:

 

a) Less than 50 percent of the NFFE's gross income for the preceding calendar year or other appropriate reporting period is passive income and less than 50 percent of the assets held by the NFFE during the preceding calendar year or other appropriate reporting period are assets that produce or are held for the production of passive income;

b) The stock of the NFFE is regularly traded on an established securities market or the NFFE is a Related Entity of an Entity the stock of which is regularly traded on an established securities market. For purposes of this Agreement, interests are "regularly traded" if there is a meaningful volume of trading with respect to the interests on an ongoing basis, and an "established securities market" means an exchange that is officially recognized and supervised by a governmental authority in which the market is located and that has a meaningful annual value of shares traded on the exchange;

c) The NFFE is organized in a U.S. Territory and all of the owners of the payee are bona fide residents of that U.S. Territory;

d) The NFFE is a government (other than the U.S. government), a political subdivision of such government (which, for the avoidance of doubt, includes a state, province, county, or municipality), or a public body performing a function of such government or a political subdivision thereof, a government of a U.S. Territory, an international organization, a non-U.S. central bank of issue, or an Entity wholly owned by one or more of the foregoing;

e) Substantially all of the activities of the NFFE consist of holding (in whole or in part) the outstanding stock of, or providing financing and services to, one or more subsidiaries that engage in trades or businesses other than the business of a Financial Institution, except that an entity shall not qualify for NFFE status if the entity functions (or holds itself out) as an investment fund, such as a private equity fund, venture capital fund, leveraged buyout fund, or any investment vehicle whose purpose is to acquire or fund companies and then hold interests in those companies as capital assets for investment purposes;

f) The NFFE is not yet operating a business and has no prior operating history, but is investing capital into assets with the intent to operate a business other than that of a Financial Institution, provided that the NFFE shall not qualify for this exception after the date that is 24 months after the date of the initial organization of the NFFE;

g) The NFFE was not a Financial Institution in the past five years, and is in the process of liquidating its assets or is reorganizing with the intent to continue or recommence operations in a business other than that of a Financial Institution;

h) The NFFE primarily engages in financing and hedging transactions with, or for, Related Entities that are not Financial Institutions, and does not provide financing or hedging services to any Entity that is not a Related Entity, provided that the group of any such Related Entities is primarily engaged in a business other than that of a Financial Institution;

i) The NFFE is an "excepted NFFE" as described in relevant U.S. Treasury Regulations; or

j) The NFFE meets all of the following requirements:

 

i. It is established and operated in its jurisdiction of residence exclusively for religious, charitable, scientific, artistic, cultural, athletic, or educational purposes; or it is established and operated in its jurisdiction of residence and it is a professional organization, business league, chamber of commerce, labor organization, agricultural or horticultural organization, civic league or an organization operated exclusively for the promotion of social welfare;

ii. It is exempt from income tax in its jurisdiction of residence;

iii. It has no shareholders or members who have a proprietary or beneficial interest in its income or assets;

iv. The applicable laws of the NFFE's jurisdiction of residence or the NFFE's formation documents do not permit any income or assets of the NFFE to be distributed to, or applied for the benefit of, a private person or non-charitable Entity other than pursuant to the conduct of the NFFE's charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the NFFE has purchased; and

v. The applicable laws of the NFFE's jurisdiction of residence or the NFFE's formation documents require that, upon the NFFE's liquidation or dissolution, all of its assets be distributed to a governmental entity or other non-profit organization, or escheat to the government of the NFFE's jurisdiction of residence or any political subdivision thereof.

5. Preexisting Account. A "Preexisting Account" means a Financial Account maintained by a Reporting [FATCA Partner] Financial Institution as of the Determination Date.

6. Determination Date. The "Determination Date" means the date, which may be prior to entry into force of this Agreement, on which the Treasury Department determines not to apply withholding under section 1471 of the U.S. Internal Revenue Code to [FATCA Partner] Financial Institutions. That date is: (a) June 30, 2014, in the case of (i) a jurisdiction that signed an agreement with the United States to implement FATCA or facilitate FATCA implementation on or before June 30, 2014, or (ii) a jurisdiction that the Treasury Department determined reached such an agreement in substance on or before June 30, 2014, and is included on the Treasury Department list of such jurisdictions, (b) November 30, 2014, in the case of a jurisdiction that the Treasury Department determined reached such an agreement in substance on or after July 1, 2014, and on or before November 30, 2014, and is included on the Treasury Department list of such jurisdictions, or (c) the date of signature of such an agreement, in the case of any other jurisdiction. The Determination Date for [FATCA Partner] is [November 30, 2014 or the date of signature of the Agreement].1

 

C. Account Balance Aggregation and Currency Translation Rules.

 

1. Aggregation of Individual Accounts. For purposes of determining the aggregate balance or value of Financial Accounts held by an individual, a Reporting [FATCA Partner] Financial Institution is required to aggregate all Financial Accounts maintained by the Reporting [FATCA Partner] Financial Institution, or by a Related Entity, but only to the extent that the Reporting [FATCA Partner] Financial Institution's computerized systems link the Financial Accounts by reference to a data element such as client number or taxpayer identification number, and allow account balances or values to be aggregated. Each holder of a jointly held Financial Account shall be attributed the entire balance or value of the jointly held Financial Account for purposes of applying the aggregation requirements described in this paragraph 1.

2. Aggregation of Entity Accounts. For purposes of determining the aggregate balance or value of Financial Accounts held by an Entity, a Reporting [FATCA Partner] Financial Institution is required to take into account all Financial Accounts that are maintained by the Reporting [FATCA Partner] Financial Institution, or by a Related Entity, but only to the extent that the Reporting [FATCA Partner] Financial Institution's computerized systems link the Financial Accounts by reference to a data element such as client number or taxpayer identification number, and allow account balances or values to be aggregated.

3. Special Aggregation Rule Applicable to Relationship Managers. For purposes of determining the aggregate balance or value of Financial Accounts held by a person to determine whether a Financial Account is a High Value Account, a Reporting [FATCA Partner] Financial Institution is also required, in the case of any Financial Accounts that a relationship manager knows, or has reason to know, are directly or indirectly owned, controlled, or established (other than in a fiduciary capacity) by the same person, to aggregate all such accounts.

4. Currency Translation Rule. For purposes of determining the balance or value of Financial Accounts denominated in a currency other than the U.S. dollar, a Reporting [FATCA Partner] Financial Institution must convert the U.S. dollar threshold amounts described in this Annex I into such currency using a published spot rate determined as of the last day of the calendar year preceding the year in which the Reporting [FATCA Partner] Financial Institution is determining the balance or value.

 

D. Documentary Evidence. For purposes of this Annex I, acceptable documentary evidence includes any of the following:

 

1. A certificate of residence issued by an authorized government body (for example, a government or agency thereof, or a municipality) of the jurisdiction in which the payee claims to be a resident.

2. With respect to an individual, any valid identification issued by an authorized government body (for example, a government or agency thereof, or a municipality), that includes the individual's name and is typically used for identification purposes.

3. With respect to an Entity, any official documentation issued by an authorized government body (for example, a government or agency thereof, or a municipality) that includes the name of the Entity and either the address of its principal office in the jurisdiction (or U.S. Territory) in which it claims to be a resident or the jurisdiction (or U.S. Territory) in which the Entity was incorporated or organized.

4. With respect to a Financial Account maintained in a jurisdiction with anti-money laundering rules that have been approved by the IRS in connection with a QI agreement (as described in relevant U.S. Treasury Regulations), any of the documents, other than a Form W-8 or W-9, referenced in the jurisdiction's attachment to the QI agreement for identifying individuals or Entities.

5. Any financial statement, third-party credit report, bankruptcy filing, or U.S. Securities and Exchange Commission report.

 

E. Alternative Procedures for Financial Accounts Held by Individual Beneficiaries of a Cash Value Insurance Contract. A Reporting [FATCA Partner] Financial Institution may presume that an individual beneficiary (other than the owner) of a Cash Value Insurance Contract receiving a death benefit is not a Specified U.S. Person and may treat such Financial Account as other than a U.S. Account unless the Reporting [FATCA Partner] Financial Institution has actual knowledge, or reason to know, that the beneficiary is a Specified U.S. Person. A Reporting [FATCA Partner] Financial Institution has reason to know that a beneficiary of a Cash Value Insurance Contract is a Specified U.S. Person if the information collected by the Reporting [FATCA Partner] Financial Institution and associated with the beneficiary contains U.S. indicia as described in subparagraph (B)(1) of section II of this Annex I. If a Reporting [FATCA Partner] Financial Institution has actual knowledge, or reason to know, that the beneficiary is a Specified U.S. Person, the Reporting [FATCA Partner] Financial Institution must follow the procedures in subparagraph B(3) of section II of this Annex I.

F. Reliance on Third Parties. Regardless of whether an election is made under paragraph C of section I of this Annex I, Reporting [FATCA Partner] Financial Institutions may rely on due diligence procedures performed by third parties, to the extent provided in an FFI Agreement and relevant U.S. Treasury Regulations.

G. Alternative Procedures for New Accounts Opened Prior to Entry Into Force of this Agreement.

 

1. Applicability. If [FATCA Partner] has provided a written notice to the United States prior to entry into force of this Agreement that, as of the Determination Date, [FATCA Partner] lacked the legal authority to direct Reporting [FATCA Partner] Financial Institutions either: (i) to require Account Holders of New Individual Accounts to provide the self-certification specified in section III of this Annex I or the consent to report described in subparagraph 1(d) of Article 2 of the Agreement, or (ii) to perform all the due diligence procedures related to New Entity Accounts specified in section V of this Annex I or require Account Holders of such accounts to provide the consent to report described in subparagraph 1(d) of Article 2 of the Agreement, then Reporting [FATCA Partner] Financial Institutions may apply the alternative procedures described in subparagraph G(2) of this section, as applicable, to such New Accounts, in lieu of the procedures otherwise required under this Annex I. The alternative procedures described in subparagraph G(2) of this section shall be available only for those New Individual Accounts or New Entity Accounts, as applicable, opened prior to the earlier of: (i) the date [FATCA Partner] has the ability to direct Reporting [FATCA Partner] Financial Institutions to comply with the due diligence procedures described in section III of this Annex I and obtain the consent to report described in subparagraph 1(d) of Article 2 of the Agreement with respect to New Individual Accounts, or to comply with the due diligence procedures described in section V of this Annex I and obtain the consent to report described in subparagraph 1(d) of Article 2 of the Agreement with respect to New Entity Accounts, which date [FATCA Partner] shall inform the United States of in writing by the date of entry into force of this Agreement, or (ii) the date of entry into force of this Agreement. If the alternative procedures for New Entity Accounts opened after the Determination Date, and before January 1, 2015, described in paragraph H of this section are applied with respect to all New Entity Accounts or a clearly identified group of such accounts, the alternative procedures described in this paragraph G may not be applied with respect to such New Entity Accounts. For all other New Accounts, Reporting [FATCA Partner] Financial Institutions must apply the due diligence procedures described in section III or section V of this Annex I, as applicable, to determine if the account is a U.S. Account or an account held by a Nonparticipating Financial Institution and must obtain the consent to report described in subparagraph 1(d) of Article 2 of the Agreement.

2. Alternative Procedures.

 

a) Within one year after the date of entry into force of this Agreement, Reporting [FATCA Partner] Financial Institutions must: (i) with respect to a New Individual Account described in subparagraph G(1) of this section, request the self-certification specified in section III of this Annex I and the consent to report described in subparagraph 1(d) of Article 2 of the Agreement and confirm the reasonableness of such self-certification consistent with the procedures described in section III of this Annex I, and (ii) with respect to a New Entity Account described in subparagraph G(1) of this section, perform the due diligence procedures specified in section V of this Annex I and request information as necessary to document the account, including any self-certification, required by section V of this Annex I and request the consent to report described in subparagraph 1(d) of Article 2 of the Agreement.

b) Reporting [FATCA Partner] Financial Institutions must report on any New Account that is identified pursuant to subparagraph G(2)(a) of this section as a U.S. Account or as an account held by a Nonparticipating Financial Institution, as applicable, by the date that is the later of: (i) September 30 next following the date that the account is identified as a U.S. Account or as an account held by a Nonparticipating Financial Institution, as applicable, or (ii) 90 days after the account is identified as a U.S. Account or as an account held by a Nonparticipating Financial Institution, as applicable. The required to be reported with respect to such a New Account is any information that would have been reportable under this Agreement if the New Account had been identified as a U.S. Account or as an account held by a Nonparticipating Financial Institution, as applicable, as of the date the account was opened.

c) By the date that is one year after the date of entry into force of this Agreement, Reporting [FATCA Partner] Financial Institutions must close any New Account described in subparagraph G(1) of this section for which it was unable to collect the required self-certification or other documentation or consent to report pursuant to the procedures described in subparagraph G(2)(a) of this section. In addition, by the date that is one year after the date of entry into force of this Agreement, Reporting [FATCA Partner] Financial Institutions must: (i) with respect to such closed accounts that prior to such closure were New Individual Accounts (without regard to whether such accounts were High Value Accounts), perform the due diligence procedures specified in paragraph D of section II of this Annex I, or (ii) with respect to such closed accounts that prior to such closure were New Entity Accounts, perform the due diligence procedures specified in section IV of this Annex I.

d) Reporting [FATCA Partner] Financial Institutions must report on any closed account that is identified pursuant to subparagraph G(2)(c) of this section as a U.S. Account or as an account held by a Nonparticipating Financial Institution, as applicable, and for which consent to report was obtained, by the date that is the later of: (i) September 30 next following the date that the account is identified as a U.S. Account or as an account held by a Nonparticipating Financial Institution, as applicable, or (ii) 90 days after the account is identified as a U.S. Account or as an account held by a Nonparticipating Financial Institution, as applicable. The information required to be reported for such a closed account is any information that would have been reportable under this Agreement if the account had been identified as a U.S. Account or as an account held by a Nonparticipating Financial Institution, as applicable, as of the date the account was opened. Accounts described in this subparagraph G(2)(d) for which consent to report was not obtained must be treated as Non-Consenting U.S. Accounts and aggregate information on such accounts must be reported as described in subparagraph 1(b)(ii) of Article 2 of the Agreement.

H. Alternative Procedures for New Entity Accounts Opened after the Determination Date, and before January 1, 2015. For New Entity Accounts opened after the Determination Date, and before January 1, 2015, either with respect to all New Entity Accounts or, separately, with respect to any clearly identified group of such accounts, Reporting [FATCA Partner] Financial Institutions may treat such accounts as Preexisting Entity Accounts and apply the due diligence procedures related to Preexisting Entity Accounts specified in section IV of this Annex I in lieu of the due diligence procedures specified in section V of this Annex I. In this case, the due diligence procedures of section IV of this Annex I must be applied without regard to the account balance or value threshold specified in paragraph A of section IV of this Annex I.
FOOTNOTE

 

 

1 Either November 30, 2014, or the date of signature, as appropriate as described in (b) or (c), will be included in this sentence in the signed Agreement.

 

END OF FOOTNOTE
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