On 18th March 2010 the United States (US) Government enacted The Foreign Account Tax Compliance Act (FATCA) to combat tax evasion by US persons holding investments in offshore accounts. FATCA requires Foreign Financial Institutions (FFIs) to provide the US Internal Revenue Service (IRS) with information on certain US persons invested in accounts outside of the US and for certain non-US entities to provide information about any US owners. Capital Security Bank Limited and subsidiaries are considered FFIs and therefore required to comply.
Capital Security bank Limited and all subsidiaries are committed to upholding customer confidence and to keeping customer and client information confidential and secure. Our actions as they relate to FATCA will be in strict compliance with the local regulations and legal framework of the countries in which we operate.
Steps Required for FFIs to be compliant with FATCA regulations
- Signing of formal agreement with the United States Internal Revenue Service (IRS) confirming FATCA Compliance
- Amending account opening procedures in order to capture FATCA related information
- Updating information of current customers
- Annual reporting to the IRS on qualifying ‘U.S. Persons’
Frequently Asked Questions
What is FATCA?
FATCA stands for the Foreign Account Tax Compliance Act. It refers to provisions included in the Hiring Incentives to Restore Employment Act that was signed into law on by the United States (US) Congress on 18 March 2010 and effective January 1, 2014. It adds a new chapter to the US Internal Revenue Code (chapter 4) which is aimed at addressing perceived tax abuse by US persons using accounts outside of the US.
Who is a US person?
- a U.S. citizen (including dual citizens) even if residing outside of the US
- a US passport holder
- a person born in the US unless renounced citizenship
- a U.S. resident alien for tax purposes (green card holders)
- entities(partnerships,corporations, trusts, etc) where one or more United States persons have control or over 10% shareholding
What is a Foreign Financial Institution (FFI)?
- accept deposits as a regular business function are engaged in the business of investing
- holds financial assets for the account of others as a substantial portion of its business
- are involved in reinvesting, or trading in securities, partnership interests, commodities, or any interest in such securities, partnership interests, or commodities
Is FATCA applicable to individuals or business customers?
Both. FATCA is applicable to both individuals and business customers.
How will FATCA work?
- FFIs will be required to register with the US Internal Revenue Service (IRS) and will be assigned a Global Intermediary Identification Number (GIIN). FFIs will be required to submit information on persons with US indicia who hold accounts with them or own over 10 per cent (10%) of an entity that has an account with the FFI, above a stipulated threshold. It is important to note that this will vary for individuals and companies.
How will FATCA impact our customers?
All customers will be subject to an electronic perusal of their account information. This perusal seeks to determine which accounts have US indicia. US “indicia” include: whether a customer has US citizenship or permanent residency. It also includes the use of US address; Post Office Boxes and US telephone numbers. If these basic levels of indicia are identified, customers will be required to disclose their legal name, address, and US Tax Information Number (TIN). This information, as well as the account number, the account balance; and the gross receipts and gross withdrawals or payments from the account will be sent to the IRS.
- Customers holding accounts which predate the implementation date will be required to update their account information and as per regulations if the account exhibits US indicia, the customer may be asked to provide additional info as a US person or to prove that they are not a US person.
Impact on New Customers
Changes in onboarding procedures will impact new customers as additional information may be requested from new applicants to determine whether they are US persons.
What are the consequences to customers for not disclosing the information required by FATCA?
Customers who do not disclose the requisite information to an FFI will have their accounts flagged as non-compliant. The FFI will be required to eventually close the account if the information is not received within a specified period of time. Until the closure of the account, a 30% levy will be applied to any payment of interest, rents, royalties, salaries, wages, annuities, licensing fees, income, and profits derived from sources within the US.
When is the commencement date for FATCA?
The implementation of FATCA is slated for 1 July 2014.
I have U.S. Dollar Account, will this be reported?
The currency of the account does not determine whether the information is reported. FATCA requires information to be reported on accounts held by U.S. Persons who meet one of more of the criteria identified in Question 2 and with balances above the reporting threshold regardless of account currency.
I qualify as a U.S. Person how will FATCA apply to me?
If you qualify as a U.S. Person based on the information outlined in question #2, you may be required to submit further information to your Financial Institution. Customers are also advised to seek further advice from a tax professional.
Do FATCA regulations apply to joint accounts?
- If one of the account holders qualifies as a U.S person, and the account balance is above the reporting threshold- FATCA requirements are that the account should be reported. Customers are also advised to seek further advice from a tax professional.
Can my financial institution provide tax related advice?
Your financial institution can only provide general FATCA information, however customers are advised to see tax advice from a relevant tax professional.
Are all Financial Institutions complying with FATCA?
- Financial institutions across the globe in many jurisdictions have signed agreements to comply and many more intend to sign. There are exceptions however, with some financial institutions opting to adopt a different approach to FATCA.
Is more detailed information on FATCA available online?
Yes. For further information on FATCA, please visit:
If asked to complete a US Tax Declaration(s), you can access it via the below,