ACFCS Conference

FATCA three R’s for Non-US Institutions by Sean Huber

The Foreign Account Tax Compliance Act is going to affect Foreign Financial Institutions (FFIs) to an extraordinary degree. This panel on FATCA and the three R’s for non-US Financial Institutions (FI) aimed at showing the far reach FATCA will have and how FFIs can comply with “Register, Review, and Report”.

The panel began with a detailed description of how FATCA can be implemented by US and non-US FIs. To discuss this were two representatives from the IRS, Nicole Cammarota and Ted Setzer. They clearly described the types of multi-faceted interactions the IRS will be having with FFIs. The speakers then outlined the role of Inter-Governmental Agreements (IGAs) and how their emergence resulted from a conflict between FATCA requirements and the local laws of affected nations.

There are currently 22 IGAs between the US and other nations and two model types within these IGAs; namely Models 1 and 2. Model 1 is a bilateral treaty to exchange information through a direct relationship with the IRS where partner jurisdictions can report information on U.S. account holders directly to their national tax authorities. In Model 1, a “reciprocal” exchange of information is possible. The Model 2 IGA allows FFIs to report automatically to the IRS rather than local jurisdictions and offers no “reciprocal” exchange.

The panel further consisted of three FFI representatives from nations with signed IGAs: Ron King from Scotiabank (Canada), LaTonia Tinker from Bayshore Group (Bahamas), and Javier Vargas Muñoz from Banco de Costa Rica; as well as an attorney from Washington, D.C., who specializes in FATCA compliance, Bruce Zagaris. All spoke of the increased amount of reviewing and reporting that will happen under FATCA. Along with this comes the need for increased identification methods of account holders, including increased KYC and CDD, increased documentation and reporting, and a myriad of other scenarios from withholding to designating responsible officers within the FFI.

FATCA is becoming an important part of FFIs’ infrastructure and will require a very intricate implementation, according to the panel. The role of implementation relies on more than just a single person. How it is carried out by the FFIs will be essential to its effective use.





Sean Huber is a second-year graduate student earning his MA at MIIS with a specialization in Trade, Investment, and Development. He focuses on cross-border capital flows and the implications, both good and bad.  He is taking the CFCS examination in April.