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FATCA: Hong Kong’s Compliance Efforts

As the Foreign Account Tax Compliance Act (FATCA) comes into effect, Hong Kong financial institutions are preparing to comply with the new regulations. In a recent statement, the Hong Kong Exchanges and Clearing Limited (HKEX) emphasized the importance of FATCA compliance for its clearing houses.

Clearing Houses’ GIIN Numbers

The four clearing houses under HKEX have been identified as “Reporting Financial Institutions” under FATCA. They have been assigned unique Global Intermediary Identification Numbers (GIINs), which are:

  • Hong Kong Securities Clearing Company Limited - 7ENI1T.00000.LE.344
  • HKFE Clearing Corporation Limited - 7ENI1T.00002.ME.344
  • The SEHK Options Clearing House Limited - 7ENI1T.00003.ME.344
  • OTC Clearing Hong Kong Limited - 7ENI1T.00004.ME.344

Stocks Generating U.S. Source Dividend Income

According to HKSCC, certain stocks cleared and settled by them generate U.S. source dividend income. As of today, these stocks include:

  • Amgen Inc. (04332)
  • Cisco Systems, Inc. (04333)
  • Intel Corporation (04335)
  • Applied Materials, Inc. (04336)
  • Starbucks Corporation (04337)
  • Microsoft Corporation (04338)
  • iShares MSCI South Korea Index Fund (04362)
  • iShares MSCI Taiwan Index Fund (04363)
  • Coach, Inc. - RS (06388)

FATCA Compliance for Hong Kong Financial Institutions

Despite the common misconception that FATCA can be avoided by not participating in U.S. securities markets, HKEX strongly recommends that Participants assess the potential implications of FATCA on their business operations and clients.

Even if a financial institution does not have any U.S. account holders, they are still required to perform due diligence on existing and new client accounts to identify their FATCA statuses.

Consult Professional Advisors

HKEX emphasized that nothing in this FAQ should be construed as legal or tax advice. Participants are encouraged to consult their own professional advisors regarding the implications of FATCA.

Conclusion

In conclusion, Hong Kong financial institutions must take steps to comply with FATCA regulations, which will require them to identify and report U.S. accounts held by foreign financial institutions. Failure to comply may result in penalties and fines.