AEOI QI compliance requirements | KPMG | GLOBAL
QI compliance requirements

AEOI QI compliance requirements

QI compliance requirements

Background

The updated Qualified Intermediary (QI) Agreement (‘Revenue Procedure 2017-15’) released on 30 December 2016 subsequently replaced the external audit requirement of the previous rules with internal compliance requirements. Under this, a QI has to designate a Responsible Officer (RO) to oversee the QI’s compliance with its QI Agreement, make certifications (every 3 years) to the Internal Revenue Service (IRS) and provide the IRS with certain factual information regarding the QI.

The new QI compliance requirements propose challenges for ROs. The QI agreement states that the RO needs to have provided the IRS with the necessary certifications by 1 July of the calendar year that follows the certification period. The initial certification period ends on 31 December 2017. Thus, the RO certification is due to the IRS by 1 July 2018 (31 December 2018 if the review year is 2017).

ROs must make certifications on a number of areas including the QI’s internal controls and this should cover controls under the QI Agreement and FATCA regime. In order for the RO to make this certification, he or she needs to have comfort and ensure the QI is compliant covering the main areas below:

  • written policies and procedures for QI and FATCA
  • training the relevant staff who are involved or impacted by the QI regime
  • systems are required to be in place to ensure the QI is compliant with documentation, withholding and reporting rules under the QI Agreement
  • compliance with the periodic review requirement (which replaced the old external audit).

Challenges

QIs may be challenged by the new compliance requirements and the limited time for ROs to implement changes (e.g. implementing updated policies and procedures, curing documentation failures and ensuring staff are trained to a compliant standard) and certify the QI on internal controls.

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