William Byrnes' Tax, Wealth, and Risk Intelligence

free chapter download here —> http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671   Number of Pages in PDF File: 58

The June 2^nd FATCA GIIN list included 77,354 financial institutions from 205 countries and jurisdictions (give or take 1), nearly 75% of which are covered by Model 1 IGA.  As of June 8, 2014, only 70 IGAs have been signed or treated as if signed.  Below is a list of 100 country and jurisdiction FFI registrations, and the Deemed Compliant FFI registration by IGA Model 1.  (see follow up June 16 article with more countries and analysis of FFI registrations: https://profwilliambyrnes.com/2014/06/16/list-of-ffi-registrations-by-country/)

Do 180 More Countries and Jurisdictions Need IGAs?

The USA recognizes 196 independent states in the world (the IRS recognizes Palestine as a State according to the FATCA list, otherwise the State Department only recognizes 195 – see my June 2^nd article here), 67 dependencies of states, and has contacts with Taiwan.  But 14 of the dependencies are administered by the United States.  So with Taiwan and Palestine counted, 54 jurisdictions have financial institutions that probably must register for FATCA.

I have previously written that not each of these 54 dependencies probably requires an IGA.  My estimate was that approximately 16 dependencies of the 54 have both local responsibility with regard to tax policy and more than de minimis US source income exposure, such as investments in US Treasuries, for the local authorities to seek an IGA. Such dependencies include by example Bermuda, Cayman Islands, and Hong Kong.

A host of dependencies, such as Antarctica and various atolls, have no (current) global economic relevance.  Yet, even the British Indian Ocean Territory, Falkland Islands, French Southern Territories, and Christmas Island have a registered FATCA financial firm each.  In that the French Southern Territories does not have a permanent population, being scientific research stations on uninhabited Islands by Madagascar, it is curious that the financial firm DBSBV Holding Sci registered there (I cannot find any information on this company?  Any readers want to help me on this one?).   Just as curious is the Russian Bank’s AK BARS Investments Corporation registering in the British Indian Ocean Territory, which is an insignificant  British and American military outpost with a couple hundred military staff, Mauritius and Philippine foreign-contract workers.  Christmas Island with its population of 2,000 entertains the FFI registration of Everbright Equity Advantage Fund (I wonder if anyone within these four extremely small dependencies has even heard of FATCA).

Thus, based on the GIIN list of registrations from dependent jurisdictions and multiple reader emails, I acknowledge underestimating the amount of dependent “jurisdictions”  that will require an IGA, at least a Model 2.  I thought that such minor dependencies FFIs would generally fall under registration exceptions and instead only require W-8BEN-E documentation (e.g. “Certified Deemed-Compliant Nonregistering Local Bank”, “Certified Deemed-Compliant FFI with Only Low-Value Accounts”).

Going forward in my articles, my previous estimate of 212 states and jurisdictions that probably could benefit from an IGA (Model 2 for jurisdictions without populations) will be replaced by the full number of countries and jurisdictions recognized by the US for FATCA, which is 250, accommodating even the economically insignificant territories like British Indian Ocean Territory and French Southern Territories, and the contentious ones such as Palestine and Taiwan.  Therefore, as of June 8th, 180 countries and jurisdictions are without IGAs that could benefit from one – substantially more than previously estimated.

FFI Registration Among Model 1 IGAs and the Rest

Did all the FFIs that are in the 180 countries and jurisdictions that do not have an IGA register for a GIIN by the final June 3^rd deadline to be included in the July GIIN list?  Not even close.

Only 77,353 registered from 205 countries and jurisdictions by the initial May 5^th extended deadline for the June 2^nd GIIN list.  Of those, 74% (57,170) are from Model 1 IGAs (signed and recognized) and thus Deemed Compliant FFIs (reporting to their respective revenue authorities pursuant to local regulations, not directly to the IRS).[1]  These DCFFIs had until the end of the year to register, withholding only beginning for payments from January 1^st. Only Kosovo, as a Model 1 IGA country, did not have a single FFI registration.

The remaining 10,260 registered FFIs are from 136 of the 205 countries on the GIIN list.  Thus, of 180 non-IGA countries and jurisdictions, 44 of them did not have any FFI registrations yet,  for which withholding begins upon withholdable payments to non compliant FFIs from July 1^st.

Approximately 20% of the total registered FFIs are Cayman Islands firms (14,836) (see my article of June 2nd). 

There is not one reliable number of how many financial entities in the world qualify as a financial institution requiring FATCA registration.  The list of FFIs requiring registration includes, by example, trusts companies, certain trusts, life insurance companies, investment funds, banks.  The IRS has said that “At this time, the full FFI list is expected to be less than 500,000 records.” Thus, the IRS must plan that as many as another 420,000 still need to register, even if the final number is only half that.

BRIC Registration

Brazil leads the BRIC countries with 2,258 FFI registered, followed by Russia (514), India (246) with China only having 211.  Based on this list, it does not appear that India and China have wide spread acceptance for FATCA yet. Will Crimea financial firms register under the Ukraine or Russia (probably Russia)?  Will the IRS recognize such registration?

NAFTA Registrations

2,264 FFIs registered from Canada and Mexico at 418.

Major OECD Countries Registrations

The United Kingdom (6,263) Revenue has recently announced that it will not adopt the IRS issued six-month extension (until December 31, 2014) for entity accounts (see my articles of May 5^th and 2^nd).  Thus, from July 1st, UK FFIs must document all personal and entity accounts under the requirements for “new” accounts as opposed as to “pre-existing” account due diligence procedures.

Australia (1,864), France (2,290), Germany (2,254), Ireland (1,756) and Netherlands (2,053).

European Financial Centers Registrations

Switzerland (4,040), Luxembourg (3,560), Austria (2,978), Lichtenstein (239).

Guernsey (2,395), Jersey (1,618), Isle of Man (312) and Gibraltar (96).

Caribbean Financial Centers Registrations

BVI (1,837), Bahamas (610), Bermuda (1,242) and Panama (450).

State of Palestine Registrations

23 FFIs registered with the IRS, listed as from the State of Palestine.  Primarily MENA banks and a branch of HSBC Middle East Bank.  As I wrote June 2,  I suspect that this will be a contentious issue between the US and Israel because while “the State of Palestine” is not yet recognized by the State Department (it’s still the Palestinian Territories), this new IRS recognition may be an ‘under the radar screen’ Administration initiative.  It may have just been a contract programmer providing his/her own sentiments to the registration list.

North Korean Registrations

I listed North Korean because, as you are probably aware, it is a sanctioned country by OFAC (see http://www.treasury.gov/resource-center/sanctions/Programs/pages/nkorea.aspx) with a FINCEN AML update available at http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-A005.pdf

So who registered from North Korea? Branches of Bank or America, Wells Fargo, and Deutsche Bank (search the first part of the GIIN until you find the ultimate party for it).

It is possible to receive exceptions to the OFAC sanctions for certain activities. Like I assume that US Aid to North Korea (a.k.a. nuke-mail shakedown funds) has to be transferred there by the US government somehow. I had assumed this occurred through approved intermediary South Korea banks, but now that I have reviewed the GIIN list, it appears that maybe some funds are transferred directly between countries.

“Other” Registrations

23 financial firms listed “other” as the country / jurisdiction.  I am not sure why, given that it appears by my glance over – each has a country in which to register.  Harneys Nevis by example should probably register under Nevis (or where it is incorporated, if not Nevis)?  Why is the Austrian insurance group, Sigal Life UNIQA group Austria,  registered under “Other”?  Perhaps the July 1st list will have movement from “Other” to actual countries?

Model 1 IGA – 29 (followed by number of registered FFIs)

1. Australia (4-28-2014): 1,864
2. Belgium (4-23-2014): 249
3. Canada (2-5-2014): 2,264
4. Cayman Islands (11-29-2013): 14,836
5. Costa Rica (11-26-2013): 122
6. Denmark (11-19-2012): 186
7. Estonia (4-11-2014): 26
8. Finland (3-5-2014): 466
9. France (11-14-2013): 2,290
10. Germany (5-31-2013): 2,554
11. Gibraltar (5-8-2014): 96
12. Guernsey (12-13-2013): 2,395
13. Hungary (2-4-2014): 101
14. Honduras (3-31-2014): 47
15. Ireland (1-23-2013): 1,756
16. Isle of Man (12-13-2013): 312
17. Italy (1-10-2014): 456
18. Jamaica (5-1-2014): 41
19. Jersey (12-13-2013): 1,618
20. Liechtenstein (5-19-2014): 239
21. Luxembourg (3-28-2014): 3,560
22. Malta (12-16-2013): 235
23. Mauritius (12-27-2013): 727
24. Mexico (4-9-2014): 418
25. Netherlands (12-18-2013): 2,053
26. Norway (4-15-2013): 312
27. Slovenia (6-2-2014): 20
28. Spain (5-14-2013): 1,187
29. United Kingdom (9-12-2012): 6,263

Model 2 IGA – 5

1. Austria (4-29-2014)
2. Bermuda (12-19-2013)
3. Chile (3-5-2014)
4. Japan (6-11-2013)
5. Switzerland (2-14-2013)

Jurisdictions that have reached agreements in substance:

Model 1 IGA – 33 (followed by number of registered FFIs)

1. Azerbaijan (5-16-2014): 16
2. Bahamas (4-17-2014): 610
3. Barbados (5-27-2014): 123
4. Brazil (4-2-2014): 2,258
5. British Virgin Islands (4-2-2014): 1,837
6. Bulgaria (4-23-2014): 72
7. Colombia (4-23-2014): 172
8. Croatia (4-2-2014): 50
9. Curaçao (4-30-2014): 173
10. Czech Republic (4-2-2014): 92
11. Cyprus (4-22-2014): 279
12. India (4-11-2014): 246
13. Indonesia (5-4-2014): 307
14. Israel (4-28-2014): 321
15. Kosovo (4-2-2014) – nil
16. Kuwait (5-1-2014): 77
17. Latvia (4-2-2014): 40
18. Lithuania (4-2-2014): 21
19. New Zealand (4-2-2014): 334
20. Panama (5-1-2014): 450
21. Peru (5-1-2014): 164
22. Poland (4-2-2014): 164
23. Portugal (4-2-2014): 255
24. Qatar (4-2-2014): 46
25. Romania (4-2-2014): 109
26. Seychelles (5-28-2014): 37
27. Singapore (5-5-2014): 783
28. Slovak Republic (4-11-2014): 54
29. South Africa (4-2-2014): 317
30. South Korea (4-2-2014): 396
31. Sweden (4-24-2014): 312
32. Turkey (6-3-2014): 65
33. Turks and Caicos Islands (5-12-2014): 27
34. United Arab Emirates (5-23-2014): 135

Model 2 IGA – 2

1. Armenia (5-8-2014)
2. Hong Kong (5-9-2014)

FFIs registered by a selection of 100 of 205 countries and jurisdictions.

1. Afghanistan: 7
2. Andorra: 33
3. Anguilla: 70
4. Antigua & Barbuda: 35
5. Argentina: 269
6. Armenia: 27
7. Aruba: 13
8. Australia: 1,864
9. Austria: 2,978
10. Azerbaijan: 16
11. Bahamas: 610
12. Barbados: 123
13. Belgium: 249
14. Belize: 122
15. Bermuda: 1,242
16. Brazil: 2,258
17. Bulgaria: 72
18. BVI: 1,837
19. Canada: 2,264
20. Cayman Islands: 14,836
21. China: 211
22. Christmas Island: 1 (Everbright Equity Advantage Fund)
23. Colombia: 172
24. Comoros Is.: 1
25. Costa Rica: 122
26. Cook Is.: 72
27. Croatia: 50
28. Curacao: 173
29. Cyprus: 279
30. Czech Republic: 92
31. Denmark: 186
32. Estonia: 26
33. Falkland Islands: 1
34. Finland: 466
35. France: 2,290
36. French Southern Territories: 1
37. Germany: 2,554
38. Gibraltar: 96
39. Greenland: 1
40. Guernsey: 2,395
41. Honduras: 47
42. Hong Kong: 1,539
43. Hungary: 101
44. Iceland: 5
45. India: 246
46. Indonesia: 307
47. Ireland: 1,756
48. Isle of Man: 312
49. Israel: 321
50. Italy: 456
51. Jamaica: 41
52. Japan: 3,251
53. Jersey: 1,618
54. North Korea: 4
55. South Korea: 396
56. Kuwait: 77
57. Latvia: 40
58. Lichtenstein: 239
59. Lithuania: 21
60. Luxembourg: 3,560
61. Macao: 36
62. Malta: 235
63. Mauritius: 727
64. Mexico: 418
65. Monaco: 98
66. Netherlands: 2,053
67. New Zealand: 334
68. Norway: 312
69. Other: 22
70. Panama: 450
71. Peru: 164
72. Poland: 164
73. Portugal: 255
74. Qatar: 46
75. Romania: 109
76. Russia: 514
77. St Kitts & Nevis: 70
78. St Lucia: 60
79. Saint Pierre & Miquelon: 1
80. San Marino: 14
81. Saudi Arabia: 17
82. Seychelles: 37
83. Singapore: 783
84. South Africa: 317
85. Spain: 1,187
86. Slovakia: 54
87. Slovenia:  20
88. St Vincent & the Grenadines: 104
89. Sweden: 312
90. Switzerland: 4,040
91. Taiwan: 408
92. Turkey: 65
93. Turks & Caicos: 27
94. Ukraine: 105
95. United Arab Emirates: 135
96. United Kingdom: 6,263
97. USA: 562
98. Uruguay: 131
99. Venezuela: 29
100. Wallis & Fortuna: 1

[1] Model 1 IGA FFIs with a GIIN are classified as “Registered Deemed-Compliant Foreign Financial Institutions” (RDCFFI) on the new W8-BEN-E (see previous article) instead of as Participating Foreign Financial Institutions (PFFIs) pursuant to the regular FATCA FFI agreement and Model 2 IGA.

Lexis Guide to FATCA Compliance – 2015 Edition 

1,200 pages of analysis of the compliance challenges, over 54 chapters by 70 FATCA contributing experts from over 30 countries.  Besides in-depth, practical analysis, the 2015 edition includes examples, charts, time lines, links to source documents, and compliance analysis pursuant to the IGA and local regulations for many U.S. trading partners and financial centers.   The Lexis Guide to FATCA Compliance, designed from interviews with over 100 financial institutions and professional firms, is a primary reference source for financial institutions and service providers, advisors and government departments.  No filler of forms and regs – it’s all beef !  See Lexis’ order site and request a copy of the forthcoming 2015 edition – http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod19190327

A free download of the first of the 34 chapters is available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671

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• Chapter 1 Background and Current Status of FATCA
• Chapter 1A The International Financial System and FATCA
• Chapter 2 Practical Considerations for Developing a FATCA Compliance Program
• Chapter 2A FATCA Internal Policy
• Chapter 3 FATCA Compliance and Integration of Information Technology
• Chapter 4 Financial Institution Account Remediation
• Chapter 4A FATCA Customer Outreach
• Chapter 5 FBAR and Form 8938 Reporting and List of International Taxpayer IRS Forms
• Chapter 6 Determining U.S. Ownership of Foreign Entities
• Chapter 7 Foreign Financial Institutions
• Chapter 7A Account reporting under FATCA
• Chapter 8 Non-Financial Foreign Entities
• Chapter 9 FATCA and the Offshore Trust Industry
• Chapter 10 FATCA and the Insurance Industry
• Chapter 11 Withholding and Qualified Intermediary
• Chapter 12 FATCA Withholding Compliance
• Chapter 13 “Withholdable” Payments
• Chapter 13A Reporting Payments
• Chapter 14 Determining and Documenting the Payee
• Chapter 14A W8 Equivalents
• Chapter 15 Framework of Intergovernmental Agreements
• Chapter 16 Analysis of Current Intergovernmental Agreements
• Chapter 17 European Union Cross Border Information Reporting
• Chapter 18 The OECD Role in Exchange of Information: The Trace Project, FATCA, and Beyond
• Chapter 19 Germany
• Chapter 20 Ireland
• Chapter 21 Japan
• Chapter 22 Mexico
• Chapter 23 Switzerland
• Chapter 24 United Kingdom
• Chapter 25 Brazil
• Chapter 26 British Virgin Islands
• Chapter 27 Canada
• Chapter 28 Spain
• Chapter 29 China
• Chapter 30 Netherlands
• Chapter 31 Luxembourg
• Chapter 32 Russia
• Chapter 33 Turkey
• Chapter 34 India
• Chapter 35 Argentina
• Chapter 36 Aruba
• Chapter 37 Australia
• Chapter 38 Bermuda
• Chapter 39 Colombia
• Chapter 40 Cyprus
• Chapter 41 Hong Kong
• Chapter 42 Macau
• Chapter 43 Portugal
• Chapter 44 South Africa
• Chapter 45 France
• Chapter 46 Gibraltar
• Chapter 47 Guernsey
• Chapter 48 Italy