Definition of Foreign Financial Institutions (FFIs)
- FFIs are financial institutions organized under laws outside the United States.
- The IRS's non-exhaustive list includes:
- Depository institutions
- Custodial institutions
- Investment entities
- Certain insurance companies with cash value products or annuities
Procedures for Licensed Non-Bank Financial Institutions
- Evaluate whether the institution qualifies as an FFI under FATCA.
- Analyze FATCA's impact on operations and take steps to avoid penalties.
- Develop policies and upgrade operating systems to identify and tag FATCA-subject account holders.
- Consider compliance with relevant Philippine laws such as:
- Securities Regulation Code
- Investment Company Act
- Bank Deposit Secrecy Law
- Data Privacy Act
- Use respective industry associations as centralized channels for FATCA queries to/from the U.S. government.
- Include FATCA-related disclosures in client notices.
- Disclose compliance status with FATCA requirements in quarterly and annual reports, starting with the report for the quarter ending March 31, 2014.
FATCA Registration and Reporting Requirements
- FFIs must register with the IRS via an online portal and obtain a Global Intermediary Identification Number (GIIN).
- They must report specified U.S. account information to the IRS including:
- Name, address, and Taxpayer Identification Number (TIN) of each specified U.S. person account holder.
- For U.S.-owned foreign entities, details of substantial U.S. owners.
- Account numbers.
- Account balances or values as determined by the Secretary of the Treasury.
- Gross receipts and withdrawals/payments unless exempted.
Online Registration and Compliance Management
- The IRS provides a one-stop FATCA registration portal enabling online communication and authority delegation.
- Foreign financial institutions must monitor the IRS website for updates and deadlines.
Jurisdiction and Enforcement
- The Philippine SEC does not enforce FATCA nor interpret U.S. tax laws.
- Legal advice must be sought from the IRS or qualified consultants.
Effective Date
- This Circular takes effect immediately upon issuance on April 3, 2014.
This comprehensive explanation covers all salient features including the Circular's purpose, definitions, procedural directives, reporting obligations, and limitations of SEC's authority.