9911796707
TMI BlogDue diligence requirementX X X X Extracts X X X X X X X X Extracts X X X X ..... ment agency or a municipality, which includes the name of the entity and either the address of its principal office in the country or territory in which it claims to be a resident or the country or territory in which the entity was incorporated or organized; (iv) any financial statement, third-party credit report, bankruptcy filing, or a report of the Government agency regulating the securities market; (b) high value account means a pre-existing individual account with a balance or value that,- (i) in case of a U.S. reportable account, exceeds an amount equivalent to one million U.S. dollars as on the 30th June, 2014 or 31st December of any subsequent year; and (ii) in case of other reportable account, exceeds an amount equivalent to one million U.S. dollars as on the 31st December, 2015 or 31st December of any subsequent year; (c) lower value account means a pre-existing individual account with a balance or value that,- (i) in case of a U.S. reportable account, exceeds an amount equivalent to fifty thousand U.S. dollars but does not exceed an amount equivalent to one million U.S. dollars as on the 30th June, 2014; and (ii) in case of other reportable accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count, which is a cash value insurance contract or an annuity contract, the reporting financial institution, under any other law for the time being in force in India, is prevented from selling such contract to a person who is not a resident of India for tax purposes; (b) with respect to lower value accounts among pre-existing individual accounts the following procedures shall apply, namely:- (i) the reporting financial institution must review electronically searchable data maintained by the reporting financial institution for any of the following indicia, and apply provisions contained in sub-clauses (ii) to (v), namely:- (A) identification of the account holder as a resident of any country or territory outside India for tax purposes or unambiguous indication of a place of birth in the United States of America; or (B) current mailing or residence address (including a post office box) in any country or territory outside India; or (C) one or more telephone numbers in a country or territory outside India and no telephone number in India; or 2 [(D) in case of U.S. reportable account, any standing instructions to transfer funds to an account maintained in a country or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holder's information unambiguously indicates a place of birth in the United States of America and the reporting financial institution obtains, or has previously reviewed and maintains a record of,- (I) a self-certification that the account holder is neither a citizen of the United States of America nor its resident for tax purposes; (II) a passport or other Government-issued identification evidencing the account holder's citizenship ornationality in a country other than the United States of America; and (III) a copy of the account holder's certificate of loss of nationality of the United States of America or a reasonable explanation of- (1) the reason, the account holder does not have such a certificate despite relinquishing citizenship of the United States of America; or (2) the reason, the account holder did not obtain citizenship of the United States of America at birth; (B) of any country or territory outside India if, the account holder's information contains a current mailing or residence address in any country or territory outside India, one or more telephone numbers in any country or territory outside India (and no telephone number in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntation; (C) the most recent documentation obtained by the reporting financial institution pursuant to rules framed under the Prevention of Money-laundering Act, 2002 (15 of 2003) or any other law for the time being in force; (D) any power of attorney or signature authority forms currently in effect; and 3 [(E) in case of U.S. reportable account, any standing instructions to transfer funds currently in effect and in case of other reportable account any standing instructions (other than with respect to a depository account) to transfer funds currently in effect:] Provided that where the electronically searchable databases include fields for, and capture all the information referred to in sub-clause (iii) of this clause, then review of the customer master file and documents referred to above shall not be required; (iii) a reporting financial institution is not required to perform the paper record search referred in sub-clause (ii) of this clause to the extent the reporting financial institution's electronically searchable information includes the following, namely:- (A) the account holder's residence status for tax purposes; (B) the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from such account holder a self-certification or documentary evidence to establish the residence or residences for tax purposes of the account holder: Provided that if the reporting financial institution cannot obtain such self-certification or documentary evidence, it shall report the account as an undocumented account; (vi) if a pre-existing individual account is not a high value account as on the 30th June, 2014 (for U.S. reportable account), or as the case may be, 31st December, 2015 (for other reportable account), but becomes a high value account as on the last day of year 2015 (for U.S. reportable account) or last day of any subsequent calendar year (for all reportable accounts), the reporting financial institution shall complete the enhanced review procedures specified in this clause with respect to such account within the calendar year following the year in which the account becomes a high value account and if based on such review the account is identified as a reportable account, the reporting financial institution shall report the required information about such account with respect to the year in which it is identified as a reportable account and subsequent years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is high value account as on the 31st December, 2015, shall be completed by the 31st December, 2016; ] (iii) in case of other reportable account that is low value account as on the 31st December, 2015, must be completed by the 30th June, 2017; (e) any pre-existing individual account which has been identified as a reportable account under this sub-rule shall be treated as a reportable account in all subsequent years, unless the account holder ceases to be a resident of any country or territory outside India as per tax laws of such jurisdiction. (4) The following procedures shall apply for purposes of identifying reportable accounts among new individual accounts, namely:- (a) unless the reporting financial institution elects otherwise, the following new individual accounts are not required to be reviewed, or reported as U.S. reportable accounts, namely:- (i) a depository account unless the account balance exceeds an amount equivalent to fifty thousand U.S. dollars at the end of any calendar year; (ii) a cash value insurance contract unless the cash value exceeds an amount equivalent to fifty thousand U.S. dollars at the end of any calendar year; (b) in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) unless the reporting financial institution elects otherwise, either with respect to all pre-existing entity accounts or, separately, with respect to any clearly identified group of such accounts, a pre-existing entity account with an aggregate account balance or value which does not exceed an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 30th June, 2014 (in case of a U.S. reportable account), or as the case may be, 31st December, 2015 (in case of other reportable account), is not required to be reviewed, identified, or reported as a reportable account until the aggregate account balance or value exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as of the last day of any subsequent calendar year; (b) a pre-existing entity account that has an aggregate account balance or value that exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 30th June, 2014 (in case of a U.S. reportable account), or as the case may be, 31st December, 2015 (in case of other reportable account), and a pre-existing entity account that does not exceed an amount equivalent to two hundred and fifty thousand U.S. dollars as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the account holder is not a reportable person: Provided that if the information as per item (A) indicates that the account holder is an entity not based in the United States of America which is a financial institution, or the reporting financial institution verifies the account holder's Global Intermediary Identification Number, then the account shall not be treated as a U.S. reportable account; (ii) treat the account holder as a non-participating financial institution if,- (A) the account holder is an Indian financial institution or other partner jurisdiction financial institution and treated by the United States of America as a non-participating financial institution; (B) the account holder, being a financial institution, is not an Indian financial institution or other partner jurisdiction financial institution, unless the reporting financial institution,- (I) obtains a self-certification from the account holder that it is a financial institution referred to in sub-clauses (a) to (m) of clause (5) of rule 114F; or (II) in the case of participating foreign financial institution defined in Annex II of the FATCA agreement or a financial institution refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty accounts with an aggregate account balance or value that exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 30th June, 2014 (in case of a U.S. reportable account) shall be completed by the 30th June, 2016 and review of pre-existing entity accounts with an aggregate account balance or value that exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as on the, 31st December, 2015 (in case of other reportable account) shall be completed by the 31st December, 2016; ] (ii) review of pre-existing entity accounts with an aggregate account balance or value which does not exceed an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 30th June, 2014 (in case of a U.S. reportable account), or as the case may be, 31st December, 2015 (in case of other reportable account), but exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 31st December of a subsequent year, shall be completed within the calendar year following the year in which the aggregate account balance or value exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars; (iii) if there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial entity with one or more controlling persons who are reportable persons and in making these determinations the reporting financial institution shall follow the following procedures, namely:- (A) for purposes of determining whether the account holder is a passive non-financial entity, the reporting financial institution shall rely on a self-certification from the account holder to establish its status, unless it has information in its possession or that is publicly available, based on which it can reasonably determine that the account holder is not a passive non-financial entity; (B) for purposes of determining the controlling persons of an account holder, a reporting financial institution may rely on information collected and maintained in accordance with the rules made under the Prevention of Money-laundering Act, 2002 (15 of 2003); (C) for purposes of determining whether a controlling person of a passive non-financial entity is a reportable person, a reporting financial institution may rely on a self-certification from the account holder or such controlling person; (b) the reporting financial institution shall determine whether the account holder is a non-partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y it, or by a related entity, but only to the extent that the computerised systems of that reporting financial institution links the financial accounts by reference to a data element such as client number or taxpayer identification number, and allows account balances or values to be aggregated; (iii) for purposes of determining the aggregate balance or value of financial accounts held by a person to determine whether a financial account is a high value account, a reporting financial institution shall also be required, in the case of any financial accounts that a relationship manager knows, or has reason to know, are directly or indirectly owned, controlled, or established (other than in a fiduciary capacity) by the same person, to aggregate all such accounts; (iv) for the purposes of rules 114F, 114G and this rule, any account maintained in rupees or in any permissible currency (other than the United States Dollar) as designated by the Reserve Bank of India shall be converted to United States Dollar at the end of the reporting period as per the reference rates of the Reserve Bank of India and such converted amount in the United States Dollar shall be used for determining the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting financial institution, as applicable, as of the date the account was opened; (c) by the date that is one year after the date of entry into force of the FATCA agreement, reporting financial institutions shall close any new account described in clause (a) for which it was unable to collect the required self-certification or other documentation in accordance with the procedure specified in clause (b): Provided that in addition, by such date, the reporting financial institutions shall,- (i) with respect to such closed accounts which prior to such closure were new individual accounts (without regard to whether such accounts were high value accounts), perform the due diligence procedure specified in clause (c) of sub-rule (3), or (ii) with respect to such closed accounts which prior to such closure were new entity accounts, perform the due diligence procedures specified in sub-rule (5); and (d) the reporting financial institution shall report the information specified in rule 114G in respect of any closed account which is identified under clause (c) as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable, by the ..... 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