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FATCA: Who Needs to File a Mandatory Certification with the IRS?

The first round of IRS compliance certifications begins this summer. The certification process was supposed to have started last summer but the IRS postponed the deadline. The current deadline is 90 days after the IRS deploys the certifications capability on the IRS FATCA Registration Portal. Deployment is expected in July 2018.

What Are the Certifications?

There are two certifications.

The first is the Certification of Compliance with the Due Diligence Requirements for Pre-existing Accounts of PFFIs (Including Reporting Model 2 FFIs). The key points to which the Responsible Officer (RO) certifies:

  • The participating FFI has completed the review of all high-value pre-existing individual accounts (an account with a balance or value exceeding US$1 million).

  • There have been no formal or informal practices or procedures in place to assist account holders in the avoidance of FATCA from the period starting on August 6, 2011.

The second certification is the Periodic Certification. The key points to which the RO certifies:

  • Whether there were any material failures that occurred during the certification period.

  • Whether there were any events of default during the certification period.

  • There are effective internal controls including establishment of a compliance program, periodic review of the compliance program, appropriate FATCA withholding and tax depositing, reporting of recalcitrant account holders, AML compliance, establishment of a tax penalty reserve for financial statement purposes.

Who Must Submit the Certifications?

FATCA requires Responsible Officers (ROs) of Participating Foreign Financial Institutions (PFFIs) including Model 2 IGA FFIs to submit the certifications. Also included are Reporting Model 1 FFIs if they have registered a branch located outside of a Model 1 jurisdiction.

The following are the current Model 2 IGA jurisdictions:

The following are Non-IGA jurisdictions:

Next Steps

Although you are in the midst of completing FATCA and CRS reporting, it is important to determine now whether you have adequate written policies and procedures in place.

In addition, ROs may want to set a deadline for those employees she delegated FATCA responsibilities to, to provide her a sub-certification.

For assistance, please contact me via my contact page or at elizabeth@elizabethmcmorrowlaw.com.

#FATCA #ResponsibleOfficer #ROCertifications

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