FATCA and CRS FAQs

FATCA is a US tax transparency regime that came into effect in 2014 and that seeks to prevent tax evasion by US Persons holding Financial Accounts outside the US. Most countries have implemented FATCA into their local legislation through Intergovernmental Agreements (“IGAs”) with the US.

FATCA is applicable in all jurisdictions irrespective of whether an IGA is in place. Entities qualifying as Foreign Financial Institutions (“FFIs”) are required under FATCA to apply certain due diligence, withholding and reporting procedures on their account holders.

The Bank is required by law to comply with FATCA and has registered all its subsidiaries and branches qualifying as FFIs with the US Internal Revenue Service (“IRS”).

Under FATCA, FFIs must collect certain information regarding the US/non-US status of individual and entity clients, as well as the FATCA status of entity clients. For certain types of entity clients, this will generally include the US/non-US status of the entity’s Controlling Persons. This information is used to determine whether the Bank needs to report any information regarding those clients under FATCA.

The Bank will generally only report you under FATCA, if you are a US Person (including certain types of entities incorporated in the US), a US Controlling Person of a non-US entity or a non-complying client suspected to be a US Person.

Identified or suspected US Persons are reported annually, either directly or indirectly (via local tax authorities), to the IRS.

Generally, reportable information includes:

• Name;
• Address;
• US Taxpayer Identification Number (“TIN”);
• Date of birth (for individuals and Controlling Persons);
• Account number;
• Account balance;
• Certain payments made into the account.

To enable the Bank to comply with the above-mentioned FATCA due diligence and reporting obligations, you may be required to complete an applicable FATCA form. Without a valid FATCA form it may not be possible for you to open a new account with the Bank. You can download these from the Bank’s FATCA page.

The FATCA forms may also be obtained from:

• A Standard Chartered branch;
• Your Relationship Manager (if applicable).

You should be aware that in providing the certification contained in the FATCA form, a statement that is false, misleading or incorrect may be regarded as an offence and, therefore may be subject to penalties under relevant laws or regulations.

As part of the Bank’s FATCA compliance obligations, it is required to apply FATCA specific due diligence procedures, which generally include the collection and validation of FATCA specific forms and documentation for the Bank’s clients, irrespective of whether the client has any connection with the US.

The Bank does not offer tax or legal advice to its clients. The Bank is therefore unable to assist a client to fill its FATCA form as this would constitute tax advice. A client should seek professional tax or legal advice where needed.

The FATCA form will generally remain valid unless there is a Change in Circumstances which affects your tax residence status or where any information provided in the form becomes incorrect, except where the account is maintained in a jurisdiction that does not have an IGA in place. In providing the FATCA form to the Bank, you, as an account holder, are certifying that you will inform the Bank within 30 days of any such Change in Circumstances.

If you do not respond to the Bank’s request for information, the Bank may need to treat your account as a reportable account for FATCA purposes. This means that the Bank may be obliged to report information regarding Financial Accounts held by you to the designated tax authority.

In addition, the Bank may, in certain circumstances, decline any requests for new accounts, decline to enter into any further transaction with you, and/or close your existing account(s).

CRS and FATCA both target offshore tax evasion and require financial institutions to identify clients’ tax statuses, monitor clients for Change in Circumstances and report clients’ account details, as applicable.

However, FATCA focuses only on tax evasion by US Persons, whilst CRS targets tax evasion from the perspective of the client’s country (or countries) of tax residence.

You can find out more about the regulatory obligations related to FATCA on the IRS’ FATCA webpage or on the Bank’s FATCA webpage.

Any change which affects your US/non-US status or your FATCA entity status, or where any information previously provided in a FATCA form becomes incorrect.

Controlling Persons are broadly any natural persons who ultimately exercise control over an entity through direct or indirect ownership interest or by any other means. For example, a person owning more than a certain percentage of the company, often 25% or more.

In jurisdictions where no IGA is in place, the concept of substantial US owner applies instead of that of Controlling Person. Broadly, a substantial US owner is a US Person that owns or holds more than 10% shares or beneficial interests in the entity.

A Financial Account is an account maintained by a Foreign Financial Institution and include depository accounts, custodial accounts, equity and debt interest in certain investment entities, cash value insurance contracts, and annuity contracts.

Broadly, any non-US financial institution that includes, depository and custodial banks, investment entities, and certain insurance companies.

An IGA is a bilateral agreement signed between the US government and another government regarding the implementation of FATCA. Broadly, these IGAs are categorised as either Model 1 or Model 2. FFIs in Model 1 jurisdictions are required to report to their local tax authorities who in turn report to the IRS whereas FFIs in Model 2 jurisdictions are required to report directly to the IRS.

The list of countries that have entered into an IGA can be found on the US Treasury webpage.

The IRS is the US federal tax authority. They are the final recipients of all information reported under FATCA.

An FFI that does not comply with the FATCA provisions. This category may also apply to entity clients that do not cooperate with the Bank’s requests for FATCA forms and documentation.

A US Person can be broadly defined as any of the following:

• A US citizen or US resident;
• A US partnership, corporation or estate;
• Any trust if:
  • A court within the US is able to exercise primary supervision over the administration of the trust, and
  • One or more US persons have the authority to control all substantial decisions of the trust;
• Any other person that is not a foreign person from a US tax perspective.

A US Citizen can be defined as any of the following:

• A person who was born in the US (provided they have not renounced their US citizenship or were born to a foreign diplomatic officer accredited to the US);
• A person who holds a US passport;
• A person who is a naturalized citizen of the US.

CRS is a global standard for the automatic exchange of financial information between jurisdictions. The Organisation for Economic Co-operation and Development (“OECD”) introduced CRS in order to combat tax evasion and to improve cross-border tax compliance. It came into effect on a jurisdiction-by-jurisdiction basis starting from 2016.

To date, more than 100 jurisdictions have adopted CRS. They are referred to as Participating Jurisdictions. The full list of jurisdictions that have committed to the implementation of CRS is available on the OECD website.

The Bank is required by law to comply with CRS in all Participating Jurisdictions.

Under CRS, Financial Institutions (“FIs”) in Participating Jurisdictions must collect certain information regarding the status and tax residence country (or countries) of its clients. For certain types of entity clients, this will include the country (or countries) of tax residence of the entity’s Controlling Persons. This information is used to determine whether the Bank needs to report any information regarding those clients under CRS.

The Bank will generally only report you under CRS if you have (or are presumed to have, based on information the Bank has about you) a tax residence outside of your account booking location.

FIs must report information on such client to the local tax authority in the country where the account is held. This information will then be exchanged annually by that tax local authority with the tax authority in each Reportable Jurisdiction in which the client is tax resident.

Generally, reportable information includes:

• Name;
• Address;
• Country (or countries) of tax residence;
• Taxpayer Identification Number (“TIN”);
• Date and place of birth (for individuals or Controlling Persons);
• Account number;
• Account balance;
• Certain payments made into the account.

In order to enable the Bank to comply with the above-mentioned CRS due diligence and reporting obligations, you may be required to complete an applicable CRS form. Without a valid CRS form it may not be possible for you to open a new account with the Bank. You can download these from the Bank’s CRS page.

The CRS forms may also be obtained from:

• A Standard Chartered branch;
• Your Relationship Manager (if applicable).

You should be aware that in providing the certification contained in the CRS form, a statement that is false, misleading or incorrect may be regarded as an offence and, therefore may be subject to penalties under relevant laws or regulations.

The OECD provides general information regarding tax residence.

The Bank does not offer tax or legal advice to its clients. The Bank is therefore unable to assist clients to fill their CRS form or to assess their tax residence as this would constitute tax advice. A client should seek professional tax or legal advice where needed.

The CRS form will remain valid unless there is a Change in Circumstances which affects your tax residence status or where any information provided in the form becomes incorrect. In providing the CRS form to the Bank, you, as an account holder, are certifying that you will inform the Bank within 30 days of any such Change in Circumstances.

If you do not respond to the Bank’s request for information, the Bank may need to treat your account as a Reportable Account for CRS purposes. This means that the Bank may be obliged to report information regarding Financial Accounts held by you to the designated local tax authority in accordance with local legislation of the Participating Jurisdiction where the Financial Account is maintained. The local tax authority may exchange this information with the tax authority of another country in accordance with relevant laws.

In addition, the Bank may, in certain circumstances, decline any requests for new accounts, decline to enter into any further transaction with you, and/or close your existing account(s).

CRS and FATCA both target offshore tax evasion and require financial institutions to identify clients’ tax statuses, monitor clients for Change in Circumstances and report clients’ account details, as applicable.

However, FATCA focuses only on tax evasion by US Persons, whilst CRS targets tax evasion from the perspective of the client’s country (or countries) of tax residence.

You can obtain more information on CRS on the OECD’s CRS webpage or on the Bank’s CRS webpage.

Any change which affects your tax residence status or where any information previously provided in a CRS form becomes incorrect.

Controlling Persons are broadly any natural persons who ultimately exercise control over an entity through ownership interest or by any other means. For example, a person owning more than a certain percentage of a company, generally 25% or more.

A Financial Account is an account maintained by a Financial Institution and include depository accounts, custodial accounts, equity and debt interest in certain investment entities, cash value insurance contracts, and annuity contracts.

Broadly, an FI includes, depository and custodial banks, investment entities, and certain insurance companies.

A jurisdiction with which an agreement is in place pursuant to which it will provide the specified information under CRS and which is identified in a published list.

A Reportable Account is a Financial Account that is maintained by an FI and that, pursuant to due diligence procedures consistent with CRS, has been identified as an account that is held by one or more Reportable Persons or by a Passive NFE with one or more Controlling Persons that are Reportable Persons.

A Reportable Jurisdiction is a jurisdiction with which an agreement is in place to provide information about Reportable Persons that are identified as having a tax residence in that jurisdiction.

A Reportable Person is:

• An entity that is tax resident in a Reportable Jurisdiction, other than:
  • A corporation (or its related entity) the stock of which is regularly traded on one or more established securities markets;
  • A governmental entity;
  • An international organisation;
  • A central bank; or
  • A Financial Institution (exceptions apply).
• An individual who is tax resident in a Reportable Jurisdiction under the laws of that jurisdiction. Dual resident individuals may rely on tiebreaker rules contained in tax conventions (if applicable) to solve cases of double residence for purposes of determining their residence for tax purposes.

A TIN is a unique combination of letters or numbers assigned by a jurisdiction to an individual or an entity and used to identify the individual or entity for the purposes of administering the tax laws of that jurisdiction.

Some countries do not issue a TIN in any situation. Other countries issue TINs only to entities, but not to individuals. In other countries, whilst TINs may be issued to both individuals and entities, individuals or entities in particular situations may not be issued with a TIN. In some countries, another high integrity number with an equivalent level of identification (a functional equivalent) may be used instead of a TIN to identify a particular person.

Please refer to the OECD’s TIN guidance for more information.