William Byrnes' Tax, Wealth, and Risk Intelligence

Below is a selection of the 77,353 registered from 115 of the total 205 countries and jurisdictions on the June 2nd list. Of the total registered as of June, 70,811 FFIs (91.5%) registered from the 78 countries and jurisdictions that as of June 15th have an IGA.  Thus, these 70,811 probably registered either as Deemed Compliant FFIs or as branches by the initial May 5^th extended deadline.

Only 6,542 FFIs registered from the remaining 172 countries and jurisdictions either as Participating FFIs or branches.  Withholding agents are finalizing systems to begin 30% withholding on the Non-Participating FFIs within these 172 non-IGA countries.  Withholding on IGA jurisdiction non-compliant FFIs only begins January 1st.

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

FFI Registration Among Model 1 IGAs and the Rest

Of a possible 250 countries and jurisdictions recognized by the US State Department and IRS (not including the 14 US dependencies for which FATCA withholding does not apply), 45 do not yet have an FFI registration.  But of the 205 countries and jurisdictions with FFI registrations, 20% of the total registered FFIs are Cayman Islands firms (14,836) (see my article of June 8). 

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.”

Some financial pundits are estimating as many as twice this figure.  Yet it seems that the categories of ‘certified deemed compliant’ FFIs and exempt FFIs should soak up a number of small, local FFIs.  Yet,  the UK Revenue HMRC estimates 75,000 of its FFIs are impacted by FATCA (http://www.hmrc.gov.uk/fatca/itc-regs-2013.pdf – page 4) (down from 300,000 prior to the UK-USA IGA).   If the UK, as one albeit important financial center, requires anything close to 75,000 FFI registrations, then the IRS figure of 500,000 FFI registrations is far too low.  Note that the ‘500,000’ FFI figure, if it excludes the corresponding branch registrations in other jurisdictions, and if it excludes the five classifications of “Certified Deemed Compliant”, seems more realistic.

BRIC Registration

Brazil leads the BRIC countries with 2,258 FFI registered, followed by Russia (514), India (246) with China only having 211.

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.  See June 8th article  about this contentious issue.

North Korean Registrations

While North Korean remains 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, it had 4 FFI branches register.

“Other” Registrations

23 financial firms listed “other” as the country / jurisdiction.  By example, 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?

Interesting Research on the UK FFI List (by “Edelweiss” in the comments on this blog)

Edelweiss has posted his research on the UK’s 6.263 registered FFIs (under comments to another one of this blog’s articles).  I think his research bears repeating in this article.  By example, he reviewed the list by GIIN and determined that about 1% of the global sign-ups of the June 2nd GIIN list are affiliated with AXA SA, the French financial services firm.

He then compares the 6,263 entities registered from the UK with the HMRC estimate (pg. 4) of 75,000 impacted FFIs (down from 300,000 prior to the IGA), finding that less than 10% of UK FFIs registered for the June GIIN list.  Either the HMRC estimated horribly wrong, or most UK FFIs are still undertaking initial FATCA preparation (relying on the October 25th registration deadline imposed by HRMC instead).

• The UK list is dominated by fund management firms and their various funds, private equity and the plethora of feeder funds investment trusts and quite a few trusts. Bridgepoint, a small UK private equity firm, has 72 entities (globally), while 3i, a similarly small UK private equity firm, has 45 entities (globally).
• There are quite a few entities that appear to have names suggesting they are part of a private equity holding company structure.  I presume they have an affiliation with a US private equity shareholder. Globally, there are 26 mentions of “Bidco”, 157 of “Holdco”, 37 “Midco”, 44 “Topco”, 144 “Acquisition”, 156 “Mezzanine” (not exclusively private equity, also specialty finance like mezz funds).
• I found 321 instances of “LLP” and “265″ instances of partnership
• I found 16 “deceased” and 33 “will trust”

Three Questions raised by Edelweiss

• For some reason, the large UK retailers Marks and Spencer (a plc) and John Lewis (a co-operative) found it necessary to register. M&S offers a savings account (which presumably explains why) but John Lewis doesn’t.  Could it be credit card related?

Response: A FFI is eligible to be classified as a “registered deemed-compliant” FFI (“RDCFFI”) if it completes a registration process with the IRS (See Lexis Guide to FATCA Compliance § 7.04) and either is a Reporting Model 1 FFI, or falls within one of six categories listed in Treasury Regulations Section 1.1471-5(f)(1)(i). These six categories include:

1. local FFIs; 
2. nonreporting members of participating FFI groups; 
3. qualified collective investment vehicles; 
4. restricted funds; 
5. qualified credit card issuers; or 
6. sponsored investment entities and controlled foreign corporations. 

Qualified Credit Card Issuers 

A “qualified credit card issuer” is an entity that is an FFI solely because it is an issuer of credit cards that accepts deposits only when a customer makes a payment in excess of a balance due on the card and the overpayment is not immediately returned to the customer. …

• Also present is Alliance-Boots, the UK’s largest pharmacy. They have 16 entities in the UK and Ireland (under AB Acquisition and Alliance Boots) though I assume this is because they are part owned by KKR.
• I would be curious to get your take on why Nestle Suisse SA found it necessary to register as an FFI. Is this to avoid confiscation of 30% of principal and interest on the repayment of intercompany loans from a US subsidiary? Is it because it’s a finance subsidiary and they have US source income from bonds?

Practical Compliance Guide for FATCA 

The LexisNexis® Guide to FATCA Compliance (2^nd Edition) comprises 34 Chapters by 50 industry experts grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of Intergovernmental Agreements (IGAs) and local law compliance challenges (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems.   A free download of the first of the 34 chapters is available at http://www.lexisnexis.com/store/images/samples/9780769853734.pdf