Fund Services

Compliance

Overview of FATCA & CRS

The US Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (CRS) have far-reaching implications on many entities across the globe. FATCA, implemented by the Internal Revenue Services (IRS), promotes cross-border tax compliance and was implemented to reduce offshore tax evasion by US persons holding assets through offshore accounts. Similarly, CRS was developed by the Organisation for Economic Cooperation and Development (OECD) and it is also a global reporting standard for the automatic exchange of information (AEOI).

US FATCA has the greatest implications on foreign entities that fall under the definition of a financial institution (FI). Jurisdictions that have a signed Inter-Governmental Agreement (IGA) with the IRS are classified as either Model 1 or Model 2 jurisdictions.

Hong Kong and Singapore are classified as Model 2 IGA jurisdictions. Bermuda, BVI and Cayman Islands are Model 1 IGA jurisdictions and therefore are classified as Participating Jurisdictions. Participating Jurisdictions under CRS and FATCA have certain requirements all FIs must abide by, including notification and reporting obligations, however these requirements differ depending on whether the jurisdiction has a Model 1 or a Model 2 IGA.

In line with international regulatory compliance obligations, there is heightened scrutiny on entities and institutions within a jurisdiction to be fully compliant with applicable laws. Entities and related individuals must therefore complete the required self-certification forms and comply with statutory requirements, including filings, which may relate to their relevant classification.

Non-compliance with the AEOI regulations may expose an entity, its beneficial owners and controlling persons to obligations and liabilities, including penalties.

The Automatic Exchange of Information (AEOI) introduces an information standard for the automatic exchange of financial information to combat tax evasion.  While this is a significant step toward a globally coordinated approach, it does introduce added complexity and an increased compliance burden.

Marbury’s AEOI compliance services

Marbury can provide advice and offer flexible and cost effective solutions to ensure clients meet the necessary requirements. Our services include:

  • Advising on the potential application of FATCA and CRS, including entity classification and self-certification, relevant tax authority registration and notification requirements, availability of reporting exemptions, and compliance requirements
  • Reviewing language for incorporation into offering materials, constitutional and other documents, where relevant
  • Reviewing self-certification forms, sponsored entity agreements and delegation agreements
  • Drafting or reviewing AEOI policies and procedures and assist with the implementation of a manual where relevant
  • Registering a client with the US Internal Revenue Service (IRS) and obtaining a Global Intermediary Identification Number (GIIN)
  • Classification, validation and remediation of pre-existing accounts
  • Designated Principal Point of Contact (PPOC) appointment (in the Cayman Islands for communications with the Tax Information Authority (TIA))
  • Designated Primary User appointment (in the BVI for communications with the International Tax Authority (ITA) via the Financial Account Reporting System (FARS))
  • Onboarding new accounts to ensure required data is captured, and obtaining forms and due diligence documentation for validation in advance to facilitate compliance
  • Preparation and filing of reports that are compliant with applicable legal requirements
  • For sponsoring entities – taking responsibility for FATCA compliance on behalf of the sponsoring entity client, including performing all initial and ongoing due diligence to identify any reportable accounts, GIIN registration and reporting where applicable

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