UK: Approaching Deadline For The First FATCA Certification For Responsible Officers

The first FATCA certification deadline is imminent. Designated Responsible Officers for qualifying participating Foreign Financial Institutions (FFIs) should be prepared to attest to their organisation's compliance with the Foreign Account Compliance Act (FATCA) by 15 December 2018 at the latest.

Approaching deadline for the first FATCA certification for Responsible Officers

Responsible Officers (ROs) may have been lulled into a false sense of security by the deadline pushback from July, when it was announced that the launch of the IRS portal for FATCA certification was delayed. But in the meantime, the certification portal is up and running and the Internal Revenue Service (IRS) has reiterated the importance of submitting certification on time. Responsible Officer certification is the next evolutionary step in tightening compliance by ensuring that financial institutions have taken the required actions mandated by the regulation.

Preparations should be well underway, to assess and ascertain the FATCA compliance status of your organisation. Regulations are complex and can be onerous, especially if you are responsible for compliance across different jurisdictions.  If you’re struggling with a lack of resources to complete the necessary steps, or if you are not confident about the robustness of your FATCA compliance program, seek expert help without further delay.

What you need to know

Only certain FFIs are required to submit certification, so the first step is understanding exactly what your obligations are. The IRS system assigns requests for certification to FFIs based on their FATCA registrations status, so you should log into your FFIs FATCA account and check if the FFI classification and all other details are accurate and up to date. 

FATCA certification consists of questions that the Responsible Officers of certain entities must answer and submit to the IRS to confirm the entities’ compliance with the requirements of FATCA.
Based on the country/jurisdiction of tax residence and FFI classification, certain FFIs who are in approved status or were previously in approved status are required to submit a certification.

There are two general types of certifications. The first, Certification Of Pre-existing Accounts (COPA), is a one-time certification with respect to compliance with the due diligence requirements for pre-existing accounts.

The second category relates to the entity’s ongoing compliance with various FATCA requirements (periodic certification). Periodic certifications are due every three calendar years following the due date of the first certification period.

The initial periodic certification will cover the three full calendar years plus the time from the effective date of the FFI agreement established with the IRS, or the date the Global Intermediary Identification Number (GIIN)  was issued for entities that do not enter into an FFI agreement (e.g. direct reporting Non-Financial Foreign Entities) to the beginning of the first full calendar year. For example, for an FFI that has an agreement with an effective date of 1 July 2014, the certification period starts 1 July 2014 and ends on 31 December 2017. Each subsequent certification period is the three-calendar year period following the previous certification period. The FFI has until July 1st, following the end of the certification period (i.e., six months) to submit the periodic certification.

All FATCA certifications must be made online through the FATCA registration system. A link for each applicable certification (i.e. one for COPA (if required) and one for periodic certification) will be available on the FFIs home page.

If you fail to submit the required certification in time, it is regarded as a default that could cause termination of the FFI and the FFI associated entities’ FATCA status and result in its removal from the next published FFI list.

How to prepare

As the Responsible Officer, you are required to attest to the IRS that the FFI is in compliance with specific requirements of the FATCA regulation. Or you should disclose any material failures or non-compliance, as well as describe what measures are in place to remediate this situation.

In preparation for the completion of the certifications, it is commendable that you as a Responsible Officer, as a minimum:

• satisfy yourself that your organisation has indeed effectively met defined objectives, for example by conducting an intern audit
• satisfy yourself that you have incorporated all FATCA regulatory updates into your ongoing compliance programme
• satisfy yourself that the findings from earlier periodic reviews have been addressed.

Not required to present a certification

Even if it is established that you do not have an obligation to complete a FATCA certification, there is still value in critically evaluating what your organisation is doing to become and remain FATCA compliant.

You may want to take advantage of the current industry hype following recent reports about the first FATCA related criminal conviction, to once again draw your team’s attention to the importance of FATCA compliance for your organisation.

Be mindful that FFI’s that are not required to present filings to the IRS still must answer to the local regulatory authorities in their jurisdiction of residence.

TMF Group

Keeping on top of a multinational organisation’s global regulatory compliance demands a lot of time and effort, especially in this era of fast-paced and ever evolving regulations. We have experts in over 80 jurisdictions who speak local languages and understand local requirements. As a global business, we can help you gain insight of local obligations and to become and remain complaint across all your locations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.