The Internal Revenue Service (“IRS”) published its third monthly Foreign Financial Institution (“FFI”) list at the start of August, showing those FFIs that had registered with the IRS by 25 July 2014.
The list allows searches for registered FFIs by jurisdiction. In the Isle of Man 417 FFIs have registered, compared with 2,095 entities in Jersey, 2,830 in Guernsey and 513 in Gibraltar. 18,408 entities in the Cayman Islands have registered.
The list shows that many institutions are now taking actions in relation to their FATCA implementation programmes - but the list would also seem to indicate that perhaps certain organisations that need not register have registered, whilst the use of the Sponsoring Regime may not have been fully understood by all those that have registered. The Sponsoring Regime allows a Financial Institution to engage a Sponsor, who agrees to undertake all the Inter-Governmental Agreements (“IGA”) compliance on its behalf, including account identification, due diligence and reporting where appropriate. Applying the Sponsoring Regime can reduce the administrative burden, in particular in the area of registration.
Within recent weeks, since the go-live date of 1 July, it is clear that those financial institutions that have not yet considered their FATCA registration position are starting to feel the pressure from banks as they try to open new accounts. This is particularly evident in the company and trust administration sector. Whilst many financial institutions located in Model 1 IGA jurisdictions (such as Gibraltar) may have been looking to the “final” deadline of 31 December 2014 for FFI registration, it is becoming clear that in practice the sooner an entity’s FATCA status is clarified and, if appropriate a Global Intermediary Identification Number (“GIIN”) obtained, the better.
And of course it must be remembered that whilst registration itself is driven by US FATCA and Gibraltar’s IGA with the US, the fact that a Gibraltar financial institution may have no US clients (or indeed no UK clients), will in practice generally have no impact on the need to obtain a GIIN.
It is also worth noting that the Cayman Islands and the BVI have recently followed the lead of the Crown Dependencies of Jersey, Guernsey and the Isle of Man in publishing extensive guidance on the implementation of their IGAs with the US and the UK.
KPMG can provide you with advice on entity classification, registration, the Sponsoring Regime and the wider aspects of compliance with FATCA obligations.