Financial Crime World

Foreign Account Tax Compliance Act (FATCA) and Irish Financial Institutions

Key Points

Definition of Specified Insurance Company

  • A Specified Insurance Company is an insurance company or its holding company that issues or is obligated to make payments with respect to cash value insurance contracts or annuity contracts.

Reporting Irish Financial Institution

  • An Irish resident financial institution will be a Reporting Financial Institution under FATCA unless it is exempt from FATCA reporting or deemed compliant for FATCA purposes.

Exempt Beneficial Owner

  • Entities falling within the Exempt Beneficial Owner category (e.g., Irish Governmental Organizations, International Organizations, and Certain Retirement Funds) will not have to register with the IRS nor report on accounts held by such entities.

Deemed Compliant Entities

  • Deemed compliant institutions include self-certified or registered entities listed in Part II of Annex II to the Agreement or in the US Regulations (e.g., Non-Profit Organizations, Financial Institutions with a local client base).

Reportable Accounts

  • A Reportable Account is a Financial Account held by one or more Specified U.S. Persons or by a passive NFFE with one or more controlling persons that are Specified U.S. Persons and maintained by a Reporting Financial Institution.

Areas Requiring Clarification

  1. Definition of Financial Account: The definition seems to include equity or debt interests in an Investment Entity, but it’s unclear how this would apply to shareholdings on an issuer’s share register or debenture/loan stock holdings.
  2. Types of Financial Accounts: It’s stated that a Financial Institution may offer more than one type of Financial Account, but it’s unclear what types of accounts are included beyond the five categories listed (Depository Accounts, Custodial Accounts, Cash Value Insurance Contracts, Annuity Contracts, and Equity and Debt Interests in an Investment Entity).
  3. Facilities Established for Trading Transactions: The text mentions that a Financial Institution acting as an executing broker will not be required to treat facilities established for trading transactions as a Financial Account, but it’s unclear what types of accounts would be considered “facilities” in this context.

Conclusion

The Foreign Account Tax Compliance Act (FATCA) has significant implications for Irish financial institutions. Understanding the definitions and requirements outlined in FATCA is crucial for compliance. The areas requiring clarification highlighted in this article emphasize the importance of seeking further information to ensure accurate implementation of FATCA regulations.