Goal and Legal Framework of FATCA
Enacted in March 2010, the Foreign Account Tax Compliance Act (FATCA) was conceived as a means to ensure the collection of tax revenues for U.S. individuals (U.S. citizens or residents) holding offshore accounts with Foreign Financial Institutions (FFIs). Broadly, this law imposes a new withholding and reporting regime upon all FFIs that invest directly or as an intermediary in U.S. assets.
Compliance of Cedrus Invest Bank with FATCA Obligations
As part of Cedrus Group, Cedrus Invest Bank is fully compliant with the U.S. FATCA obligations and has, in effect, obtained the status of participating Financial Institution. The Global Intermediary Identification Number (GIIN) is:
Consequences of FATCA for Clients
Dear Clients,
We have summarized hereunder some of FATCA’s provisions and the measures that we are obliged to take in this regard. However, as we are not experts in U.S. taxation, we kindly advice the concerned parties to refer to the U.S. Internal Revenue Service (IRS) and/or specialists that they deem appropriate and to act according to their guidance and recommendation. Therefore, we cannot be held liable towards anyone with respect to the understanding summarized below and to the measures that we might be required to take in the implementation process. Our esteemed concerned clients are required to contact our bank as soon as possible in order to comply with FATCA.
Cedrus Invest Bank has been putting together a list of indicators of potential U.S. taxpayers and regulatory tax and compliance transparency standards, enforced by a team with high levels of compliance expertise. CIB will contact account holders whose files contain one or several elements indicating they may be within the scope of this legislation. These individuals must, within a specified period of time, provide the bank with information and official papers that verify whether or not they are subject to U.S. taxation as per FATCA’s provisions. CIB will then send the submitted papers—in addition to other documents that may be requested—to the U.S. tax authorities to ensure these clients are U.S. taxpayers.
Throughout the process, CIB collects information that allows identification of American residents and/or citizens (including clients with dual citizenship) so that they provide their U.S. Tax Identification Number, waive bank secrecy protection towards the U.S. tax authorities, and authorize the bank to divulge account and other related information to these authorities.
When account holders are classified as “Recalcitrant Account Holder,” CIB is required by FATCA to withhold, for the benefit of the U.S. tax authorities, a percentage rate of the client’s proceeds—those that are subject to withholding as per FATCA—or to close the client’s account(s) and terminate any relationship it has with the bank within 90 days. This is implemented in any of the following cases:
- non-cooperation or refusal to provide the requested information and documents within the specified period of time
- existence of contradictory information in the documents provided by the concerned client
- refusal to waive the banking secrecy in favor of the U.S. tax authorities
Our counterparties and clients, which are also Financial Institutions, may register as a participating entity with the IRS to obtain a GIIN. Financial Institutions based in countries that are not covered by an Intergovernmental Agreement are permitted to avoid the FATCA withholding tax on U.S. source income from financial products. This registration is also required for identification purposes as part of the Intergovernmental Agreements (IGA countries).
Staff Training and Communication
Cedrus Invest Bank ensures ongoing training for employees, as well as the participation of the officers responsible for operation control in relevant seminars, workshops, and lectures, so that they may keep abreast of FATCA methods.