FATCA White Paper_normal

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FATCA:The Long Arm of the IRSHow Foreign Financial Institutions Should Prepare for the United States

Governments Effort to Combat Offshore Tax Evasion

BY

ELLEN ZIMILES, Managing Director, Head of Global Investigations & ComplianceJEFFREY LOCKE, FATCA Task Force Leader, Global Investigations & ComplianceRICHARD KANDO, FATCA Task Force Leader, Global Investigations & Compliance


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TABLE OF CONTENTS

I. Introduction 1

A. How We Got Here 1

B. The Intent of FATCA versus Execution 1

II. Understanding Select FATCA Terms 2

A. FFI 2

B. U.S. Person or Owner 2

C. FFI Reporting Requirements 2

III. First Preview of the Complexities of FATCA Implementation 3 A. Pre-Existing Accounts 3

B. New Accounts 4

IV. Worldwide Coordination:

Key to Building a Strong FATCA Compliance Program 5

A. Publicity, Publicity, Publicity: Create an Awareness Program 5

B. Information Already Maintained on Our Clients versus

The Collection of Additional Information 6

C. The Headache Begins 7

V. Conclusion 8

BIOGRAPHIES 9

EXHIBIT A 10

FATCA: The FFIs Preliminary Workow Concerning

Pre-Existing Individual Accounts

EXHIBIT B 11

FATCA: The FFIs Preliminary Workow Concerning Pre-Existing

Entity Accounts

EXHIBIT C 12

FATCA: The FFIs Preliminary Workow Concerning New

Individual Accounts

EXHIBIT D 13

FATCA: The FFIs Preliminary Workow Concerning New

Entity Accounts


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I. IntroductionA. HOW WE GOT HERE

In the past two years we have seen:

1. UBS AG enter into a deferred prosecution agreement and pay $780 million to the U.S

government for maintaining undeclared offshore accounts for U.S. taxpayers;

2. more than a dozen U.S. taxpayers plead guilty or be charged with tax fraud for maintaining

undisclosed accounts and many others still under criminal investigation; and

3. thousands of U.S. citizens disclose to the Internal Revenue Service (IRS) their secret ban

accounts.

Indeed, the veil of bank secrecy in Switzerland has been shattered.

In addition to the efforts of the IRS and the U.S. Department of Justice to combat offshore tax evasion

other countries have followed suit by purchasing account data from former bankers and pursuing the

tax gap resulting from citizens maintenance of previously undisclosed accounts. Moreover, the U.S

Governments efforts have culminated in the Foreign Account Tax Compliance Act (FATCA), which

mandates that a foreign nancial institution (FFI) identies U.S. taxpayers with accounts at the FF

or suffer a 30% withholding on all United States sourced income payments to the FFI. To avoid the

withholding tax, which would be remitted directly to the IRS, FATCA requires FFIs to obtain and repor

information on its accounts used in whole or in part by U.S. taxpayers (U.S. Accounts) to the IRSFATCA is likely the most far-reaching statute to combat tax evasion in recent history.

B. THE INTENT OF FATCA VERSUS EXECUTION

The goal of FATCA seems simple and to the point: to combat offshore tax evasion. When put into

practice, however, it becomes an extremely complicated process requiring coordination by personne

not only across business lines of the FFI but also across the globe. Even though FFIs have until Janu

ary 1, 2013 to comply, these complexities necessitate that the rst steps of preparation should begin

immediately. After setting forth some background information on FATCA and IRS Notice 2010-601 (the

Notice), this article will address the three steps that all FFIs should start now: (1) create an aware-

ness program; (2) identify the information collected by the FFI through the Customer Identication

Program (CIP), Know Your Customer Program (KYC) or other relevant programs and (3) develop

and implement a program of systems, policies and procedures and corporate governance.

1 On August 27, 2010, the IRS issued Notice 2010-60, Notice and Request for Comments Regarding Implementation of Information Reportingand Withholding Under Chapter 4 of the Code, which provides preliminary guidance regarding priority issues involving the implementation oFATCA. Notice p. 1.


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II. Understanding Select FATCA TermsOn March 18, 2010, FATCA was signed into law as part of the Hiring Incentives to Restore Employ-

ment Act (the Act).2 FATCA goes into effect on January 1, 2013 and provides the United States

Treasury and the IRS with oversight responsibility.

A. FFI

According to FATCA, an FFI is a foreign entity that: (1) accepts deposits in the ordinary course of a

banking or similar business, (2) as a substantial portion of its business, holds nancial assets for the

account of others, or (3) is engaged (or holds itself out as being engaged) primarily in the business ofinvesting, reinvesting, or trading securities, partnership interests, commodities, or any interest in these

mentioned items.3

B. U.S. ACCOUNT:

U.S. PERSON OR OWNER

A U.S. Account is, generally, a nancial account held by a specied U.S person or by an entity that,

directly or indirectly, had one or more substantial U.S. owners. FATCA denes a substantial U.S.

owner as a direct or indirect owner of: (1) more than 10% of the stock of a corporation; (2) more than

10% of the prot or capital interest in a partnership; or (3) an owner of any portion of a trust and the

holder of more than 10% of the benecial interest of a trust. Investment vehicles owned by a U.S.

person, no matter what percentage of ownership, must be reported to the IRS.4

Additionally, the Notice allows for accounts with an average account value of less than $50,000 to be

classied as other than a U.S. account.5

C. FFI REPORTING REQUIREMENTS

FFIs will be required to report the following for all U.S. Accounts to the IRS: (1) the name, address

and taxpayer identication number for each individual or U.S owned foreign entity account holder, (2)

the account number, (3) the account balance or value and (4) gross receipts and payments from the

account.6

2 H.R. 2847, Title V-Offset Provisions, Subtitle A, Foreign Account Tax Compliance. According to the Act, FATCA added 1471 though 1474 to theInternal Revenue Code (IRC).

3 IRC 1471(d)(4) and 1471(d)(5).4 IRC 1473(2).5 According of the Notice, if the sum of the average the month-end balances or values for the year of all accounts maintained with the FFI by the

account holder is less than $50,000, the accounts can be excluded from the analysis of U.S. Accounts. The Notice also allows for the FFI to usethe time period for which it reports values to its account holder to determine the average value of accounts. The Notice, pp. 29 30.

6 IRC 1471(c)(1).


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III. First Preview of the Complexities ofFATCA Implementation: PublishedGuidance, IRS Notice 2010-60

The IRSs rst guidance in interpreting FATCA is over sixty pages long and contains new acronyms

workows and requirements that each FFI must implement. Below is a high level summary of a portion

of the Notice that discusses the collection of information to identify U.S. Accounts. Its expected the IRS

will issue additional guidance regarding FATCA.

A. PRE-EXISTING ACCOUNTS

For accounts maintained in the name of individuals or entities and established prior to the signing of an

agreement (the FFI Agreement) between the IRS and the FFI (Pre-Existing Accounts)7, the Notice

allows the FFI to rely on electronically searchable information maintained by the FFI and associ-

ated with the account8 for indicia of potential U.S. status.9 For individual accounts,10 depending on

what indicia is identied through the electronic search, the FFI will have to request a Form W-9 or

Form W-8BEN and possibly other documentary evidence from the account holder to provide additiona

evidence of the account holders status.11

7 In addition to entering in an agreement with the IRS, FATCA also mandates that there be a 30% withholding on United States source incomeunless FFIs comply with reporting requirements. FATCA requires that FFIs:

1) obtain information to determine if the account is a U.S. Account;

2) comply with such verication and due diligence procedures as required with respect to U.S. Accounts;

3) report on an annual basis information relating to U.S. Accounts;

4) deduct and withhold a tax equal to 30% of certain specied payments;

5) comply with requests by the Secretary of Treasury for additional information regarding U.S. Accounts; and

6) obtain a valid and effective waiver if any foreign law would prevent reporting relating to U.S. Accounts.

IRC 1471(b).8 The Notice, p. 27.9 According to Section III.B.2 of the Notice, Individual Financial Accounts Identication by Participating FFIs for Purposes of 1471, the indici

for pre-existing individual accounts includes:1) identication of any account holder as a U.S. resident or U.S. Citizen;

2) a U.S. address associated with an account holder of the account (whether a residence address or a correspondence address);

3) a U.S. place of birth for an account holder;

4) an in care of address, a hold mail address, a P.O. address that is the sole address on le;

5) a power of attorney or signatory authority granted to a person with a U.S. address; or

6) standing instructions to transfer funds to an account maintained in the United States or direction received from a U.S. address.

The Notice, pp. 26 and 27.10 Attached hereto as Exhibit A is a owchart regarding the analysis of Pre-Existing Accounts maintained by individuals to identify potential U.S

Accounts, which is entitled FATCA: The FFIs Preliminary Workow Concerning Pre-Existing Individual Accounts.11 The Notice provides a timeframe for completing additional analyses for those Pre-Existing Accounts maintained by individuals which were ident

ed as a non-U.S. Account after reviewing electronically searchable information. The FFI has two years from the date of the FFI Agreement toapply the steps for a new individual account holder if the pre-existing accounts value was in excess of $1,000,000 during the year preceding thFFI Agreement to determine if the account holder should still be treated as a non-US Account. Within ve years of the FFI Agreement, all individuaaccounts analyzed using the Pre-Existing Accounts protocol with an account value equal to or more than $50,000 and identied as a non-U.SAccount will be subject to the procedures for New Accounts. The steps to analyze new individual accounts are described below. The Notice, pp29 and 30.


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For Pre-Existing Accounts maintained in the name of an entity, the workow is much more cumber-

some as there are numerous categories in which an entity can be classied: (1) a Participating FFI, (2)

a Deemed Compliant FFI, (3) a Non-Partic ipating FFI, (4) an entity for which FATCA does not apply, or

(5) a Non-Financial Foreign Entity (NFFE).12 If the account holder is another FFI, the FFI originating

the transaction has to determine if the beneciary FFI is FATCA compliant or exempt from reporting.

If the beneciary FFI is neither, the originating FFI must withhold 30% on the payment of U.S. source

income.

If the entity account holder is identied as a foreign entity that is not a FFI, there are additional tests to

determine if there is evidence that the entity is operating an active trade or business. This is equivalent

to a shell company test to determine if the account holder is nothing more than a company without

signicant operations or assets aside from the account and possibly being used to disguise true owner-

ship of the account. If the account holder does not provide evidence of operating as an active trade or

business, the FFI has to identify substantial benecial owners of the account. If any of these owners

are U.S. persons, the FFI has a reporting requirement.

When conducting the analysis of Pre-Existing Accounts, the workow allows for the continual request

for additional information from the account holder. After a certain time of non-responsiveness, gener-

ally one or two years from the date of request, the account holder is classied as recalcitrant (recalci -

trant account holder), which triggers a withholding and reporting requirement for the FFI.

B. NEW ACCOUNTS13

For accounts established by individuals or entities after the FFI Agreement is effectuated with the IRS

(New Accounts), the work to determine if the New Account is for the benet of a U.S. Person is similar

to the work you would complete for a Pre-Existing Account. The main difference is that FFIs are not al-

lowed to only rely on electronically searchable les, but the FFI has to use all information collected

by the FFI regardless of whether such information is available in electronically searchable les.14 As

such, FFIs would be well-served to begin including this information in electronic databases as soon as

practicable and prior to the January 1, 2013 FATCA effective date.

12 Attached hereto as Exhibit B is a owchart regarding the analysis of Pre-Existing Accounts maintained by entities to identify potential U.S. Ac-counts, which is entitled FATCA: The FFIs Preliminary Workow Concerning Pre-Existing E ntity Accounts.

13 Attached hereto as Exhibits C and D, respectively, are owcharts regarding the analysis of New Accounts maintained by individuals and entitiesto identify potential U.S. Accounts. Exhibit C is entitled FATCA: The FFIs Preliminary Workow Concerning New Individual Accounts and ExhibitD is entitled FATCA: The FFIs Preliminary Workow Concerning New Entity Accounts.

14 The Notice, p. 40.


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IV. Worldwide Coordination: Key toBuilding a Strong FATCACompliance Program

After analyzing the Notice, it is important that each FFI begins to take the following three preliminary

steps: (1) create an awareness program, (2) identify the information already collected by the FFI on

its customers, and (3) develop and implement a program of systems, policies and procedures, and

corporate governance.

A. PUBLICITY, PUBLICITY, PUBLICITY:

CREATE AN AWARENESS PROGRAM

It is important that everyone in the organization is aware of the changes that will need to be made to

comply with FATCA. There will not be a one-size ts all solution, as each business entity of the FF

may collect different information on their customers. Additionally, the awareness program has to star

early as U.S. personnel may have to persuade their counterparts and executive level business line

personnel at foreign branches of the FFI of the importance of the foreign branchs compliance with

FATCA, a U.S. based law that requires FFIs demand more information of their clients. Although much

of the program implementation will likely fall on operations, compliance and tax personnel, its impor-

tant to spread awareness of FATCA to all relationship managers and c lient facing employees overseas

as these employees will likely be receiving client questions. As part of the awareness program, a FFshould create a FATCA Task Force to identify all affected stakeholders and create an internal and

external awareness program.

1. More Responsibilities for Key Personnel: Developing a FATCA Task Force

Early on in the process, a task force should be assembled to determine how the FFI is going to

comply with FATCA. The team should include individuals with tax, CIP, KYC, Anti-Money Laun-

dering (AML), and operations responsibility, as much of the FFIs initial compliance with FATCA

as it will be driven by information already maintained by the FFI. A member of the information

technology software development team should also be included because complying with FATCA

may necessitate building a new database of electronic information or leveraging current systems

2. Parties Affected by FATCA

The FATCA Task Force must identify all stakeholders that may be affected by FATCA. This

should include domestic and foreign entities, subsidiaries, and business lines that will likely have

FATCA reporting requirements including transfer agents and custody businesses. Special atten

tion should be paid to FFI operations in jurisdictions with enhanced secrecy rules. It may require

extra effort to comply with FATCA in these jurisdictions given that KYC information may not be as

abundant in these areas and foreign law may prevent the reporting of information by the FFI to

the IRS but for a waiver by the account holder.15 Moreover, these may be the areas most vulner

able to U.S. government scrutiny.

15 FFIs are required to obtain a valid and effective waiver from the account holder if foreign law prohibits the reporting of certain information. If thewaiver is not obtained within a reasonable period of time, the FFI should close the account. IRC 1471(b)(1)(F).


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3. Internal and External Awareness

a. Get Ready: The Internal Awareness Program

An internal awareness program should be developed to teach FFI employees about

FATCA and its importance to the FFI. The internal awareness program should start at

the highest levels of the company, both domestically and abroad, to establish the

necessary tone at the top, and trickle down through the company to compliance

personnel and nally to client-facing relationship managers. The awareness program

should include the distribution of memorandums and emails as well as conference calls

and live training programs.

b. Prepare for Questions from Clients: External Awareness

A list of questions that will likely be asked by clients along with sample answers should

be drafted and shared with client facing personnel. This list, the FAQs of FATCA, should

be designed to ensure that the clients of the FFI, no matter where they are located,

receive consistent answers regarding FATCA and its importance to the FFI. The FFI

should also assess whether it is prudent to send a mailing to its customers describing

FATCA and the type of information that may be requested in the future from account

holders. This could help ease the shock when clients receive requests for documentation

from the FFI that it likely has not asked for before.

B. INFORMATION ALREADY MAINTAINED ON OUR CLIENTS

VERSUSTHE COLLECTION OF ADDITIONAL INFORMATION

After identifying all potentially affected groups and business lines, it is important to nd out what pre -

viously collected information each group has regarding its client base. According to the Notice, for

pre-existing individual and entity accounts and for only a specied period of time, the FFI is allowed

to rely on the information it already maintains in electronically searchable les to identify potential

U.S. accounts. In addition to reviewing information available in electronically searchable les, its also

important to inventory and assess client information not maintained in electronically searchable les

as any changes to the collection of the information of account holders will likely take a considerable

amount of time to implement. For example, the FATCA compliance team may want to determine:

1. Whether there is a copy of a passport in every customers le;16

2. If all addresses associated with the account are maintained in a single system; and

3. Whether the account opening questionnaire needs to change to address the potential

identication of U.S. Accounts and indicia of potential U.S. status of the account holders,

including green card holders.

The account opening process may change signicantly because of FATCA reporting requirements as much

of the FFIs ability to provide accurate information to the IRS is dependent on account opening documentation.

16 FFIs should be mindful of certain privacy laws regarding the transfer of information across borders when developing a new database or linkingpreviously developed databases. For example, see Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on theprotection of individuals with regard to the processing of personal data and on the free movement of such data. Council Directive 95/46, 1995,(EC). See also Law of the Republic of Indonesia Number 11 of 2008 Concerning Electronic Information and Transactions (2008).


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C. THE HEADACHE BEGINS:

PUTTING THE IRS GUIDANCE INTO PRACTICE

1. The Wish List

The FATCA Task Force, in close coordination with the appl ication developer, should think about ag

gregating necessary information for FATCA compliance in one electronic system or linking differen

systems to decrease the number of databases that need to be searched to identify potential U.S

Accounts and report on those accounts. The FATCA Task Force also needs to determine when infor-

mation maintained in a non-searchable format should be incorporated into a searchable database

The rst step to enhancing or creating a system to maintain the necessary CIP and KYC information for FATCA compliance is to identify to the software application developer a wish list o

information that should be warehoused in the electronic system. The specications of the new o

linked database(s) should be driven by the steps regarding the identication of U.S. Accounts

according to the Notice. Specically, at a minimum, the wish list should request the inclusion of

the following regarding the account holder:

a. All accounts

i. The aggregation of value of all accounts maintained across the FFI by each accoun

holder;

ii. The identication in the database of each account already identied as a U.S. account;

iii. A way to track correspondence sent to an account holder, including when it was sentand, if a response is necessary, when it is due; and

iv. The identication of a recalcitrant account holder.17

b. Individual Accounts

i. The U.S. address associated with any account;

ii. Where the account holder was born;

iii. Whether there is an in care of, hold mail or P.O. Box associated with the address o

the account holder;

iv. Whether there is a power of attorney for the account and also if that power of attorney

has a U.S. address;

v. Whether there are standing instructions for transfers from a U.S. address; and

vi. Whether the account holder provided to the FFI a Form W-9 or Form W-8BEN.

17 For a discussion of recalcitrant account holders see section III.A herein and the Notice, pp. 28 and 39.


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c. Entity Accounts

i. Where entity account holders were formed or incorporated;

ii. Whether an entity account holder was previously identied as a FFI;

iii. Whether an entity account holder was identied as an exception to FATCA reporting by

the Act;18

iv. Whether an entity account holder operated an active trade or business; and

v. Whether the entity account holder was previously identied as having a U.S. owner or

benecial interest by a U.S. Person;

In addition to the elds addressed above, the system should be able to maintain scanned docu -

ments to support each of the entries to ease the quality assurance review necessary for such a

robust warehouse of information and also be able to track the FFIs decisions as to whether the

account is deemed to be a U.S. Account.

2. More Policies and Procedures and an Updated Corporate Governance Program

From a practical perspective, the FFI needs to incorporate the guidance provided by the Notice

into its current policies and procedures. An initial draft of the additional procedures should, at a

minimum, outline the steps to determine if individual and entity account holders are reportable to

the IRS. The policies and procedures will likely be updated each time another notice is published

by the IRS.

From a corporate governance perspective, the FFI may decide to integrate the FATCA compli-

ance program with compliance programs relating to CIP and KYC. This function may also be

placed in operations, tax compliance, a branch network or elsewhere. No matter where ultimate

responsibility resides, however, it is obvious business line and worldwide coordination is key.

V. ConclusionAlthough FATCA does not go into effect for two years and the IRS has stated it will issue more guid-

ance, there are many practical steps FFIs can take to begin preparation of a FATCA compliance

program immediately. Additionally, if the past helps predict the future at all, FFIs may see other coun-

tries pass FATCA-type laws the way other countries followed the United States lead in pursuing the

offshore accounts of their own taxpayers.19

18 Entity account holders excluded from FATCA reporting requirements include:

1) Any foreign government, any political subdivision of a foreign government, or any wholly owned agency or instrumentality of any one ormore of the foregoing;

2) Any international organization or any wholly owned agency or instrumentality thereof;

3) Any foreign central bank of issue; or

4) Any other class of persons identied by the Secretary of Treasury for purposes of this subsection as posing a low risk of tax evasion.

IRC 1471(f).19 The Organisation for Economic Co-operation and Development (the OECD), over the years, has been seeking greater transparency and

an increase in the exchange of information to combat tax avoidance and evasion. For example, the OECD Global Forum Working Group onEffective Exchange of Information, which consists of OECD Member countries as well as delegates from other jurisdictions, developed anagreement to promote international cooperation in tax matters through exchanges of information. See http://www.oecd.org/document/37/0,3343,en_21571361_43854757_44270949_1_1_1_1,00.html.


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BiographiesELLEN ZIMILES is a Managing Director and Head of Global Investigations and Compliance inNavigants Disputes & Investigations practice. She has more than 25 years of litigation and investi-

gation experience, including 10 years as a federal prosecutor. Ms. Zimiles is a leading authority on

anti-money laundering programs, corporate governance, regulatory and corporate compliance, fraud

control and public corruption matters. She has worked with a multitude of nancial institutions prepar

ing for regulatory exams, developing remediation programs and assis ting organizations as a regulatory

liaison. Ms. Zimiles founded and served as CEO of Daylight Forensic & Advisory LLC, an internationa

investigations and compliance consulting rm which merged with Navigant in 2010. As an assistan

United States attorney in the Southern District of New York for more than 10 years, Ms. Zimiles served

in the civil and criminal divisions and was chief of the forfeiture unit for more than six years. She was

responsible for many high-prole money laundering, fraud and forfeiture cases.

JEFFREY LOCKE is an Associate Director in Navigants Disputes & Investigations practice, andalong with Richard Kando, a leader of Navigants FATCA Task Force. Mr. Locke specializes in regu-

latory compliance, anti-money laundering investigations and nancial investigations. Prior to joining

Navigant, he was a prosecutor of white collar crime for the state of New York and he worked for the

United Nations Mission in Kosovo, where he conducted investigations into war crimes, corruption and

organized crime.

RICHARD KANDO is an Associate Director in Navigants Disputes & Investigations practice, andalong with Jeffrey Locke, a leader of Navigants FATCA Task Force. Mr. Kando pr imarily assists coun

sel with anti-money laundering and other regulatory compliance related engagements and litigation

related matters. Prior to joining the consulting industry, Mr. Kando served as a special agent for the

Internal Revenue Service Criminal Investigation Division in New York City where he investigated

allegations of tax evasion and other tax related criminal offenses, mail and wire fraud, embezzlement

money laundering and identity theft. In recognition of his services as a special agent, he received the

U.S. Department of Justice Tax Division Assistant Attorney Generals Special Contribution Award.


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EXHIBITA

FATCA:THEFFISPRELIMINARYWOR

KFLOWCONCERNINGPRE-EXISTINGINDIVIDUALACCOUNTS

*

Notice2010-60identiesindiciaofUSaccountsasthefollowing:

(i)U.S.addressassociatedwithaccountholder;

(ii)U.S.placeofbirthidentiedfortheaccountholder;

(iii)ifaccountholderhasonlyanincareofaddress,

hold

mailaddressoraP.O.

Boxaddresswithrespecttotheaccounth

older;

(iv)apowerofattorneyorsignatoryauthorityhasbeengra

ntedtoapersonwithaU.

S.addressor

( v ) s t a n d i n g i n s t r u c t i o n s t o t r a n s f e r f u n d s t o a n a c c o u n t m a

i n t a i n e d i n t h e U S

o r d i r e c t i o n s r e c e i v e d f r o m a U S

a d d r e s s

Accountholderhaspreviouslybeendoc

umented

asU.S.Personfortaxpurposes

Accountholderhasbeenidentiedthroughelectronically

searchablelesas:(1)U.S.

Citizenor(2)U.S.

Resident

FFIsearchesthroughelectronicallysearchablelestodete

rmine

iftheaccounthasindiciaofpotentialU.S.status*

END

U.S.A

ccount

Trig

gers

repo

rting

requirement

Yes

Yes

No

N

o

Yes

No

No

Yes

FFIobtainsfromclientthefollowingappropriate

documentationtodetermineU.S.taxpaye

rstatus:

(1)W-9or(2)W-8BENwithinoneyearofBanks

requestforinformation

IfW

-9

rece

ived

within

one

year

END

RecalcitrantA

ccountHolder

Triggerswithholdingand

reportingrequirement

END

NonU.S.Account

Noreportingrequirement

IfW-8BEN

and/orother

documentation

received

START

Accountbalances

equaltoorgreater

than$50,000on

averageforthe

year

(optionalstep)


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EXHIBITB

FAT

CA:THEFFISPRELIMINARYWORKFLOWCONCERNINGPRE-EXISTINGENTITYACCOUNTS

Yes

No

AccountholderdocumentedasU.S.Personfortax

purposes

END

Non-Pa

rticipatingFFI

TheseincludeFFIsthatdonot

producedocumentationwithin

oneyearo

fFFIAgreement


reportin

grequirement

FFIsearch

esthroughelectronicallysearchablelestodetermine

if

theaccounthasindiciaofpotentialU.S.status*

Yes

No

ActiveTrade

orBusiness

Foreign

Entity

FFIdeterminesifentityaccountis:

(1)FFI;(2)activetradeorbusiness

or(3)non-activetradeorbusiness

PresumedU.S.Entity

Non-ActiveTrade

orBusiness

FFIhasorobtains

documentation

todetermine

entitystatus

FFI

(tentative

classication)

FFIhasorobtains

documentationto

determineentitystatus

NFFE

FFIhasorobtainswithintwoyears

ofthedatetheFFIAgreement

documentssupportingexcepted

NFFEstatusoridentifyingpersons

thathaveaninterestinanentity

END

ParticipatingFFI


END

Deemed

CompliantFFI


END

Exception1471(f)


END

Recalcitran

tAccountHolder


reportin

grequirement

END

U

.S.Account

Triggersre

portingrequirement

END

Documentsestablishnon-U.S.

Perso

nforChapter4

Norepo

rtingrequirement

END

ExceptedNFFE

NonU.S.Account


END

Exception1471(f)


END

DeemedCompliantFFI


END

ParticipatingFFI


END

Identifyindividualsandother

speciedU.S.

personsthathavean

interestinentity.

U.S.Account

Triggersreportingrequirement

END

ExceptedNFFE

NonU.S.Account


END

RecalcitrantAccountHolder



END

Non-ParticipatingFFI

TheseincludeFFIsthatdono

t


oneyearofFFIAgreement



START

EntityAccount

Identied

*

T h e I R S N o t i c e 2 0 1 0 6 0 p r o v i d e s t h e e x a m p l e o f a n e n t i t y

i n c o r p o r a t e d i n t h e U S

a s i n d i c i a o f a U S

e n t i t y


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*

Notice2010-60identiesindiciaofUSaccountsasthefollowing:

(i)U.S.addressassociatedwithaccountholder;

(ii)U.S.placeofbirthidentiedfortheaccountholder;

(iii)anyotherindiciaofpotentialU.S.status,

includingifan

accountholderhasonlyanincareofaddress,

holdmailaddressoraP.O.

Boxaddresswithrespecttotheaccountholder;

(iv)apowerofattorneyorsignatoryauthorityhasbeengra

ntedtoapersonwithaU.

S.addressor

( v ) s t a n d i n g i n s t r u c t i o n s t o t r a n s f e r f u n d s t o a n a c c o u n t m a

i n t a i n e d i n t h e U S

o r d i r e c t i o n s r e c e i v e d f r o m a U S

a d d r e s s

EXHIBITC

F

ATCA:THEFFISPRELIMINARY

WORKFLOWCONCERNINGNEW

INDIVIDUALACCOUNTS

Accountholderhaspreviouslybeendoc

umented

asU.S.Personfortaxpurposes

Accountholderhasbeenidentiedthroughelectronically

searchablelesas:(1)U.S.

Citizenor(2)U.S.

Resident

FFIsearche

sthroughallinformationcollectedbytheFFI(CIP,KYC

,AML,etc...)

whetheror

notsuchinformationisavailableinelectronicallysearc

hablelesto

de

termineiftheaccounthadindiciaofpotentialU.S.status.*

END

U.S.A

ccount

Trig

gers

repo

rting

requirement

Yes

Yes

No

N

o

Yes

No

No

Yes

FFIobtainsfromclientthefollowingappropriate

documentationtodetermineU.S.taxpaye

rstatus:

(1)W-9or(2)W-8BENwithinoneyearo

fBanks

requestforinformation

IfW-9

rece

ived

within

one

year

END

RecalcitrantA

ccountHolder


reportingr

equirement

END

NonU.S.Account


IfW-8BEN

and/orother

documentation

received

START

Accountbalances

equaltoorgreater

than$50,000on

averageforthe

year

(optionalstep)


15/16

EXHIBITD

FATCA:THEFFISPRELIMINAR

YWORKFLOWCONCERNINGN

EWENTITYACCOUNTS

Yes

No

AccountholderdocumentedasU.S.Personfortax

purposes

END

Non-Pa

rticipatingFFI

TheseincludeFFIsthatdonot


oneyearo

fFFIAgreement


reportin

grequirement

Useallin

formationcollectedbytheFFI(CIP,KYC,AML,etc...)

tod

eterminepotentialU.S.statusofaccountholder*

Yes

No

ActiveTrade

orBusiness

Foreign

Entity

FFIdeterminesifentityaccountis:

(1)FFI;(2)activetradeorbusiness

or(3)non-activetradeorbusiness

PresumedU.S.Entity

Non-ActiveTrade

orBusiness

FFIhasorobtains

documentation

todetermine

entitystatus

FFI

(tentative

classication)

FFIhasorobtains

documentationto

determineentitystatus

NFFE

FFIhasorobtainswithintwoyears

ofthedatetheFFIAgreement

documentssupportingexcepted

NFFEstatusoridentifyingpersons

thathaveaninterestinanentity

END

ParticipatingFFI


END

Deemed

CompliantFFI


END

Exception1471(f)


END

Recalcitran

tAccountHolder


reportin

grequirement

END

U

.S.Account

Triggersre

portingrequirement

END

Documentsestablishnon-U.S.

Perso

nforChapter4

Norepo

rtingrequirement

END

ExceptedNFFE

NonU.S.Account


END

Exception1471(f)


END

DeemedCompliantFFI


END

ParticipatingFFI


END

Identifyindividualsandother

speciedU.S.

personsthathavean

interestinentity.

U.S.Account

Triggersreportingrequirement

END

ExceptedNFFE

NonU.S.Account


END

RecalcitrantAccountHolder



END

Non-ParticipatingFFI

TheseincludeFFIsthatdono

t


oneyearofFFIAgreement



START

EntityAccount

Identied

*

T h e I R S N o t i c e 2 0 1 0 6 0 p r o v i d e s t h e e x a m p l e o f a n e n t i t y

i n c o r p o r a t e d i n t h e U S

a s i n d i c i a o f a U S

e n t i t y


16/16

010 Navigant Consulting, Inc. All rights reserved.

vigant Consulting is not a certied public accounting rm and does not provide audit, attest, or public accounting services.

e www.navigantconsulting.com/licensing for a complete listing of private investigator licenses.

ELLEN ZIMILES

[email protected]

JEFFREY LOCKE

[email protected]

RICHARD KANDO

212.554.2698

[email protected]

www.navigantconsulting.com

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