FATCA Compliance: The New USA PATRIOT Act?

1. FATCA Compliance: The New USA PATRIOT Act? Frank Cummings AML Partners, LLC frank@amlpartners.com 1.603.934.6530 September 19, 2013

2. When will FATCA be implemented?

3. What will be implemented?

4. FATCA: The popular kid at the party

5. Who is subject to FATCA? You are!

6. Let’s Break It Down Model 1a IGA Model 1b IGA Model 2 IGA No IGA US Financial Institutions

7. What Are the IGAs? • Inter-governmental Agreements: (Cliff Notes) • Model 1a is a government-to-government automatic exchange of tax-relevant data with reciprocity, based on currently signed treaties. (Eight currently signed, and up to eighty Model 1a IGAs currently in process.) • Model 1b is a government-to-government automatic transmission of tax-relevant data without reciprocity, based on currently sign treaties. (None currently signed) • Model 2 is a government-to-government agreement allowing Foreign Financial Institutions to report directly to the IRS, based on currently sign treaties. (Two currently signed.)

8. Rumors of Reprieve? Will Intergovernmental Agreements relieve you of FATCA responsibilities? IGAs will increase FATCA responsibilities.

9. Still up in the air… Senators: Rand Paul, Mike Lee, Jim DeMint, and Saxby Chambliss disagree with Treasury’s authority to negotiate IGA’s under FATCA without the advice and consent of the Senate. Congressman Bill Posey states there will be no reciprocity without congressional approval. Ultimately, FATCA IGAs are already authorized under previously signed conventions. Not all IGAs are created equal Model 1a IGAs (government to government with reciprocity) are going to be the largest issue for US financial institutions. IGA agreements vary from country to country. Some FATCA elements exempted for Country A remain in force for other countries. “Know Your IGAs”—KYI!

10. The Authority

11. FATCA: The New USA PATRIOT Act? Will you have to report Non-Foreign Financial Entity Data? Will you have to collect and maintain W8s ? They expire. Will you have to collect Non-IGA FFI registrations forms? Will you have to collect the name and contact information for the FFI’s designated FATCA officer? Most of the IGAs are Model 1a IGAs Model 1a IGAs require reciprocity What reciprocity is not yet well defined Like the PATRIOT Act, rules will emerge that will define collection requirements for Model 1a IGAs

12. The Scary Part of the Final Regulations “Phase in the timelines for due diligence, reporting and withholding and align them with the intergovernmental agreements. The final regulations phase in over an extended transition period to provide sufficient time for financial institutions to develop necessary systems. In addition, to avoid confusion and unnecessary duplicative procedures, the final regulations align the regulatory timelines with the timelines prescribed in the intergovernmental agreements.” ~FATCA Regulation

13. AML Partners’ Advice Understand your current Due Diligence Processes. If you’re not already automated, do it now! Flexibility in your Due Diligence Systems and Processes will determine your success. “Those who do not remember the past are condemned to repeat it.” (George Santayana)

14. AML Partners’ Advice Read every IGA and understand what your requirements will be. Who is your FATCA point person? Don’t lose focus because of the timeline extensions. “Those who do not remember the past are condemned to repeat it.” (George Santayana)

15. Will your FATCA Implementation look like this? You are here.

18. FATCA Compliance: The new USA PATRIOT Act? Frank Cummings AML Partners, LLC frank@amlpartners.com 1.603.934.653 September 19, 2013