FATCA market guide. How transfer agency can help you manage FATCA obligations

Transcription

1 FATCA market guide How transfer agency can help you manage FATCA obligations

2 Introduction Where do we stand in the FATCA world? The Foreign Account Tax Compliance Act (FACTA) is a US tax regulation aiming at avoiding tax evasion by US investors, who are liable for paying US taxes irrespective of their domicile. Its objective is to request non-us Financial Institutions (or Foreign Financial Institutions, FFIs) to identify US account holders as well as entities under US control and provide the IRS with information on their assets, income payments and trade flows during the fiscal year. The legal basis for FATCA relies largely on Intergovernmental Agreements (IGAs). Two models of the IGA have been developed: Under IGA model, partner financial institutions will be required to collect and report information to their local tax authorities, which will then pass that information to the IRS. In some cases, there may be reciprocity arrangements Under IGA model (Japan and Switzerland have signed this agreement), financial institutions will report information directly to the IRS FFIs are required to start the due diligence for their clients or investors identification on July 0. The main steps in the implementation of this regulation are presented below: Registration Identification Withholding Reporting Since 9 August 0 From July 0 From March 0 9 August to December: FFI familiarisation with the website From January to April 0: registration process, to be on the first list issued by the IRS June 0: release of the first IRS FFI list with FFIs and their GIIN number July 0: start of new clients on-boarding process Identification of pre-existing clients until 0 June 0 July 0: income withholding (US source) begins for NPFFIs July 07: gross proceeds withholding (US source) begins for NPFFI Before 07: foreign pass withholding on hold March 0: reporting on 0 year end positions on US reportable accounts March 0: reporting on positions and income March 07: reporting on positions, income and gross proceeds 0: transitional reporting first submission expected (exact date to be confirmed)

3 How to read this guide The objective of this FATCA Transfer Agent market guide for asset managers is to give you a country per country overview of where we operate as a transfer agent (TA) and how we can support you in managing your FATCA obligations. We provide a high level view of the and explain the roles of the parties involved in this activity, our view of the regulation and its local impacts. Depending on the set-up registrar model or CSD model (in some countries the two models co-exist), the responsibilities of the key players differ: Type of FATCA obligations Identification Reporting The fund/responsible entity/fund management is responsible The fund/responsible entity/fund management is responsible Central Securities Depositary (CSD) The CSD is responsible The CSD is responsible Responsibilities for complying with the new FATCA obligations will differ not only depending on the but also whether an IGA model has been signed, the type of model in question ( or ) and its transposition into national law. For Italy, as there are further specificities, please refer to page. Furthermore, our services are designed to facilitate the implementation of future regulatory developments in the area of tax reporting, ie the OECD proposed Automatic Exchange of Information (AEOI). Key information: please note that the information provided in this market guide is based on the rules as defined in March 0. In addition, all statements in this document are made for information purposes only. Each counterparty should conduct an individual analysis of its regulatory status and of the obligations it will have to comply with.

4 Australia Australia FATCA regulatory environment IGA model expected Wraps, platforms and institutional investors Asset managers will be subject to the FATCA obligations and most will look for exempt status, whilst local superannuation and pensions are likely to qualify for it The fund or the responsible entity remains responsible for FATCA duties but can benefit from an external support from its providers (TA, custodian, etc) The transfer agent is well placed to support the investor identification process and the preparation of the reporting to the fiscal authorities with regard to FATCA duties as it keeps their static data and transaction records Defining a FATCA status for each shareholder is a key prerequisite for a fund to be compliant with FATCA The TA can assist the fund in the qualification process for pre-existing and new investors: the results of the analysis are reviewed and validated by the fund, its management company or other responsible entity Reports and data extraction The TA can provide the fund with reports and static data extractions to support its review and validation of the investors FATCA status eg follow-up of investors status, detailed information for pre-existing and new investors, follow-up of change in circumstances, etc Dealing terms/ Platform agreements accounts Reporting to the local tax authorities If the signature of IGA is confirmed, the TA will support the preparation of the reports and filing to the local tax authorities on behalf of the fund Such reporting is expected to be validated by the fund or its management company prior to submission Cash movements Fund custodian Reporting ATO: Australian Tax Office Fund manager: administers the allocation of fund assets, as per the fund investment policy(ies). Responsible entity: provides trustee governance over the fund. A fund is an entity liable to perform FATCA duties and must obtain FATCA status. : sends transaction order to the TA or to the platform/wrap provider for processing. In stance of platform/ wrap product, they act as the investor on an omnibus basis for all investors to their product. Transfer agent: completes Know Your Customer (KYC) controls and new investor registration, captures investor fund transaction information, executes investor fund transactions, provides investor reporting (contract notes and holding statements), provides the fund manager with cash flow s and other management information and completes regulator and tax authority (ATO) reporting. Fund custodian: ensures safekeeping of the fund assets and completes transaction settlement activities on those assets. : calculates the fund NAV and completes the fund accounts and tax reporting.

5 Channel Islands (Jersey & Guernsey) Channel Islands (Jersey & Guernsey) FATCA regulatory environment IGA model signed on December 0 The fund: Remains responsible for FATCA duties but can delegate certain tasks to a service provider such as the transfer agent Must appoint a FATCA Responsible Officer Reporting to the local tax authorities The TA will support the preparation of the reports and filing to the local tax authorities on behalf of the fund as the Channel Islands signed an IGA Such reporting is expected to be validated by the fund or its management company prior to submission Distributor Must apply the de-minimis rules* Must register on the IRS portal to obtain a GIIN number (where applicable) The transfer agent/registrar of the fund maintains the static data and transaction records for the investors into the fund The transfer agent/registrar is therefore well placed to support the FATCA investor identification requirement as well as the preparation of the reporting to the local fiscal authorities Added value services beyond the US FATCA Support for the UK Crown Dependencies and Overseas Territories Agreement (CD/OT IGA) All of the services outlined above for the US FATCA can be provided for other regulations such as CDOT IGA, which requires funds domiciled in the Channel Islands to identify and report UK specified persons Fund manager: provides management activities for the fund, including investment management and acts as daily operational contact for the transfer agent (TA), fund administrator (FA) and custodian of the fund. A fund is an entity liable to perform FATCA duties and must obtain FATCA status. Fund custodian : sends the order to the which transfers it to the TA). Distributor: where used, principal underwriter of a mutual fund s shares, buying shares directly from the fund, and reselling them to other investors. Transfer agent: responsible for the maintenance of the fund s register and Anti Money Laundering/Know Your Customer (AML/KYC) controls for underlying investors. Fund custodian: provides safekeeping and custody activity for the fund s assets (where applicable). : provides administration and accounting services to the fund. Defining a FATCA status for each shareholder is a key prerequisite for a fund to be compliant with FATCA The TA can assist the fund in the qualification process for pre-existing and new investors: the results of the analysis are reviewed and validated by the fund, its management company or other responsible entity Reports and data extraction The TA can provide the fund with reports and static data extractions to support its review and validation of the investors FATCA status eg follow-up of investors status, detailed information for pre-existing and new investors, follow-up of change in circumstances, etc Communication with investors The TA can liaise with the investors, for example to request additional information to complete the identification process, to provide them with other FATCA specific related communications, etc * De-minimis rules apply to accounts below a fixed threshold for which identification and reporting are not required. 7

6 France France FATCA regulatory environment IGA model signed on November 0 CSD and registrar The fund and the management company remain liable to perform their FATCA duties, they can seek support from their external providers for some of the FATCA related tasks French funds (management companies) choose their appropriate status (for IRS registration) Euroclear France has confirmed that it will require all Euroclear France members to be FATCA compliant by July 0 Depending on the share form, we can provide different reports: Data extract of pre-existing investors for shares held in nominative pur form List of the custodians for shares in nominatif administré form when funds are not circulating in the CSD. In addition, we offer to verify that these custodians are EOCF members Distributor Custodian (CSD member) Settlement instructions and DVP settlement Fund custodian Settlement instructions and DVP settlement 7 For funds circulating in the form of a bearer share in Euroclear France, identification will be made by custodians (all EOCF members will be compliant) For shares held in nominatif administré form, for non EOCF funds, funds should identify the custodians. In practice, custodians are EOCF members The investors that hold shares in nominatif pur form are required to be identified by the fund/management company and might be reportable to the local tax authorities when required Reporting to the local tax authorities The TA will support the preparation of the reports and filing to the local tax authorities on behalf of the fund as France has signed an IGA Such reporting is expected to be validated by the fund or its management company prior to submission Funds may or may not be listed in Euroclear France. types of shares: bearer shares form au porteur, shares in nominatif administré form and shares in nominatif pur form. CSD: Euroclear France Central bank 8 Fund manager: administrates the fund, including investment management and usually promotion of the fund. : sends the order to the which transfers it to the TA). Distributor: where used, appointed by the promoter of the fund to distribute the fund. Custodian (CSD member): acts as custodian of the investors/distributors and ensures their KYC controls. It routes their transactions to the transfer agent and it ensures their settlement with the Central Securities Depository (CSD), in central bank money (when funds are circulating in the CSD). Transfer agent: supports centralisation, execution of orders, issuance of the shares, and financial services (corporate actions and dividends payment) on behalf of the fund. Fund custodian: provides safekeeping and custody activity for the fund s assets (where applicable). 7 : provides administration and accounting services to the fund. 8 CSD: Central Securities Depository Euroclear France (EOCF) where transactions are settled and shares are issued for funds circulating in the CSD. It ensures the FATCA qualification of its members. 8 9

7 Germany Germany FATCA regulatory environment IGA model signed on May 0 CSD For funds under KAG, the KAG is responsible for investors qualification and reporting It is aligned with the market view, therefore no specific FATCA service would be provided The CSD is responsible for the distributors qualification and the reporting to the local tax authorities. Moreover the TA has no information on the investors and cannot provide a specific support with regard to the FATCA requirements. Distributor Fund custodian issue Settlement instructions and DVP settlement Settlement instructions and DVP settlement CSD: Kassenverein/CBF 7 Central bank Fund manager: responsible for investor qualification, reporting and fund registration. : sends the order to the who transfers it to the TA). Distributor: responsible for institutional/retail clients qualification and reporting. Custodian: responsible for retail clients qualification and reporting. Transfer agent: support centralisation, execution of orders, issuance of the shares, and financial services (Corporate actions and dividends payment) on behalf of the fund. Fund custodian: provides safekeeping and custody activity for the fund s assets (where applicable). : provides administration and accounting services to the fund. 7 CSD: Central Securities Depository Clearstream Bank Frankfurt where transactions are settled and shares are issued for funds circulating in the CSD. It is responsible for distributors qualification and reporting. 0

8 Hong Kong Hong Kong FATCA regulatory environment IGA model expected Trustee Delegation via TA agreement 7 The distributor and the asset management company remain responsible for FATCA compliance. A discharge of compliance duties is possible with a special internal set-up or by using an external service provider (eg FATCA solutions offered by major audit firms, custodians, etc) The transfer agent is well placed to work with asset management companies in supporting the investor identification process and the preparation of the reporting to the fiscal authorities with regard to FATCA duties Defining a FATCA status for each shareholder is a key prerequisite for a fund to be compliant with FATCA The TA can assist the fund in recording the results of the analysis performed by the asset management company or the responsible entity Reports and data extraction The TA can provide the fund with reports and static data extractions to support the review and validation of the investors FATCA status by the asset management companies or the responsible entity, namely detailed information for pre-existing and new investors and follow-up of change in circumstances Fund custodian Reporting to the relevant tax authorities If the signature of the IGA is confirmed, the TA will support the preparation of the reports and filing to the IRS on behalf of the fund. Such reporting is expected to be validated by the fund or its asset management company or the responsible entity prior to submission Distributor Fund manager: administrates the fund, including investment management activities. Responsible for KYC/AML controls on investor/distributors investing into the fund and liable to perform FATCA duties. Trustee: delegates registrar and shareholder record keeping function to the transfer agent via a TA agreement. : sends the order to the which transfers it to the TA). Distributor: where used, appointed by the promoter of the fund to distribute the fund. Transfer agent: keeps record of the shareholder, processes transactions, calculates the trailer fee. Fund custodian: provides safekeeping and custody activity for the fund s assets (where applicable). 7 : performs NAV computation.

9 Ireland Ireland FATCA regulatory environment IGA model signed on December 0 : provides management activities for the fund, including investment management and acts as daily operational contact for the TA, fund administrator and custodian of the fund. A fund is an entity liable to perform FATCA duties and must register with the IRS to obtain a GIIN. Depositary: has fiduciary responsibility for oversight on the fund and its service providers. Distributor Fund custodian : sends the order to the which transfers it to the TA). Distributor: where used, principal underwriter of a mutual fund s shares, buying shares directly from the fund, and reselling them to other investors. Platform: an intermediate unit holder supporting fund distribution to investors and IFAs. Depositary Oversight Transfer agent: responsible for the maintenance of the fund register and AML/KYC controls for underlying investors. Fund custodian: provides safekeeping and custody activity for the fund s assets (where applicable). 7 : provides administration and accounting services to the fund. 7 The fund: Remains responsible for FATCA duties but can delegate certain tasks to a service provider such as the transfer agent Must appoint a FATCA responsible officer Must elect to apply the de-minimis rules The transfer agent is well placed to support the investor identification process and the preparation of the reporting to the fiscal authorities with regard to FATCA duties as it keeps an electronic register of investors and paper files with the account opening and due diligence documentation obtained from investors Defining a FATCA status for each shareholder is a key prerequisite for a fund to be compliant with FATCA The TA can assist the fund in the qualification process for pre-existing and new investors The results of the analysis are reviewed and validated by the fund, its management company or other responsible entity Reports and data extraction The TA can provide the fund with reports and static data extractions to support its review and validation of the investors FATCA status eg follow-up of investors status, detailed information for pre-existing and new investors, follow-up of change in circumstances, etc Communication with investors The TA can liaise with the investors, for example to request additional information to complete the identification process, to provide them with other FATCA specific related communications, etc Reporting to the local tax authorities The TA will support the preparation of the reports and filing to the local tax authorities on behalf of the fund as Ireland has signed an IGA Such reporting is expected to be validated by the fund or its management company prior to submission Support for multiple fund domiciles In addition to supporting Irish domiciled funds, Services in Ireland supports Cayman, Bermuda and other domiciles The support may differ from one country to the other, depending on its IGA model

10 Italy Italy FATCA regulatory environment IGA model signed on 0 January 0 Although IGA has been already signed on 0 January 0 the industry is waiting for the transposition of IGA in the national law For Italian domestic funds, the scope of services that we will provide will be determined once the local requirements are confirmed Signed application form Signed application form Distributor (retail bank, financial advisor) Contract note Discussions are on-going at market level (Italian banking associations, Italian asset manager association, market players and Italian regulator entities) to identify the entity responsible for reporting to local authorities For Italian domestic funds, the fund manager is the entity in charge of FATCA duties (ie checks on data collected by distributors, FATCA reporting, etc) For non-domestic funds distributed in Italy, both distributors and paying agents consider that the distributor should manage the FATCA obligations, including reporting to local authorities (to be confirmed by local regulators) For non-domestic funds distributed in Italy, if the market view is not confirmed, the local paying agent will be responsible for FATCA duties and no service could be offered Fund custodian : is responsible for investment management activities and KYC controls on investors. : sends the order to the management company which transfers it to the transfer agent or to the distributor which collects orders from several investors and transfers them to the transfer agent. Distributor: is duly appointed by the fund manager to distribute units of the fund to retail market, to collect KYC data, to collect and send orders and subscription forms to the TA. Transfer agent: provides shareholder record keeping (breakdown of each investor), processes transactions and dividends, checks AML and reporting on investors investing into the fund, calculates trailer fee. Fund custodian: provides safekeeping and custody activity for the fund s assets (where applicable). : calculates the fund NAV. 7

11 Luxembourg Luxembourg FATCA regulatory environment IGA model expected The fund or the management company remains responsible for FATCA duties but can benefit from external support from their providers (transfer agent) The transfer agent is well placed to support the investor identification process and preparation of the reporting to the fiscal authorities with regard to FATCA duties as it maintains their static data and transaction records Defining a FATCA status for each shareholder is a key prerequisite for a fund to be compliant with FATCA The TA can assist the fund in the qualification process for pre-existing and new investors: the results of the analysis are reviewed and validated by the fund or its management company Reports and data extraction The TA can provide the fund with reports and static data extractions to support its review and validation of the investors FATCA status eg follow-up of investors status, detailed information for pre-existing and new investors, follow-up of change in circumstances, etc Communication with investors Distributor The TA can liaise with the investors, for example to request additional information to complete the identification process, to provide them with other FATCA specific communications, etc Reporting to the local tax authorities Fund custodian If the signature of IGA is confirmed, the TA will support the preparation of the reports and filing to local tax authorities on behalf of the fund Such reporting is expected to be validated by the fund or its management company prior to submission Fund manager: administers the assets, as per the fund investment policy. A fund is an entity liable to perform FATCA duties. : sends the order to the which transfers it to the TA). Distributor: sells the fund in the countries in which the fund is allowed to be distributed. Also acts as intermediary between the investor and the TA. Transfer agent: identifies the investor (KYC/AML controls), collects and executes transactions, reflects the holdings in the register, sends the cash flow to the fund manager. Fund custodian: ensures the safekeeping of the fund assets, and processes transactions on assets. Fund administration: calculates the fund NAV. 8 9

12 Singapore Singapore FATCA regulatory environment IGA model expected 7 Trustee Delegation via TA agreement Fund custodian The distributor and the asset management company remain responsible for FATCA compliance. A discharge of compliance duties is possible with a special internal set-up or by using an external service provider (eg FATCA solutions offered by major audit firms, custodians, etc) The transfer agent is well placed to work with asset management companies in supporting the investor identification process and the preparation of the reporting to the fiscal authorities with regard to FATCA duties Defining a FATCA status for each shareholder is a key prerequisite for a fund to be compliant with FATCA The TA can assist the fund in recording the results of the analysis performed by the asset management company or the responsible entity Reports and data extraction The TA can provide the fund with reports and static data extractions to support the review and validation of the investors FATCA status by the asset management companies or the responsible entity. This also includes providing detailed information for pre-existing and new investors and follow-up of change in circumstances Reporting to the relevant tax authorities If the signature of IGA is confirmed, the TA will support the preparation of the reports and filing to local tax authorities on behalf of the fund. Such reporting is expected to be validated by the fund or its asset management company or the responsible entity prior to submission Distributor Fund manager: administers the fund, including investment management activities. It is responsible for KYC/ AML controls on investor/distributors investing into the fund and liable to perform FATCA duties. Trustee: delegates registrar and shareholder record keeping function to transfer agent via TA agreement. : sends the order to the which transfers it to the TA). Distributor: where used, appointed by the promoter of the fund to distribute the fund. Transfer agent: keeps record of the shareholders, processes transactions, calculates the trailer fee. Fund custodian: provides safekeeping and custody services for the fund s assets (where applicable). 7 Fund Administrator: calculates the NAV. 0

13 Spain Spain FATCA regulatory environment IGA model signed on May 0 Based on the draft of FATCA regulation, the funds or the fund management company remains responsible for FATCA duties. Additional duties to fund management companies may be imposed but have not been defined yet Duties for the special investment vehicles (SICAV) are still under discussion by the regulator Where the transfer agent maintains investors static data and transactions, it is ready to support duties defined within FATCA regulation, such as identification and reporting Defining a FATCA status for each shareholder is a key prerequisite for a fund to be compliant with FATCA The TA can assist the fund in the qualification process for pre-existing and new investors: the results of the analysis are reviewed and validated by the fund, its management company or another responsible entity Reports and data extraction The TA can provide the fund with reports and static data extractions to support its review and validation of the investors FATCA status eg follow-up of investors status, detailed information for pre-existing and new investors, follow-up of change in circumstances, etc Distributor Fund custodian/depositary bank Communication with investors The TA can liaise with the investors, for example to request additional information to complete the identification process, to provide them with other FATCA specific related communications, etc Reporting to the local tax authorities The TA will support the preparation of the reports and filing to the local tax authorities on behalf of the fund as Spain signed an IGA Such reporting is expected to be validated by the fund or its management company prior to submission Fund manager: provides management activities for the fund, including investment management. It is responsible for the AML/KYC controls of the funds investors. : sends the order to the which transfers it to the TA). Distributor: where used, principal underwriter of a fund s shares, buying shares directly from the fund, and reselling them to other investors. Transfer agent: provides shareholder record keeping (breakdown of each investor), processes transactions and dividends, checks AML and reporting on investors investing into the fund, calculates trailer fee. Fund custodian: provides safekeeping and custody activity for the fund s assets. : provides administration, accounting and also TA services to the fund. s identification responsibilities remain with the management company.

14 Switzerland Switzerland FATCA regulatory environment IGA model signed on February 0 CSD Important discussions are ongoing at market and federal levels around the regulation, despite the fact that an IGA has been signed. The effective application and scope of the regulation are not yet confirmed The discussions at market level leave uncertainties on how banks and financial institutions will be impacted and the services that can be proposed to their clients The numbers of investors managed is limited and they are only institutional clients, mainly banks and pension funds, thus reducing the identification process workload and the possible service that can be provided. The client requests will be managed as part of the service already delivered to them Defining a FATCA status for each shareholder is a key prerequisite for a fund to be compliant with FATCA The TA can assist the fund in the qualification process for pre-existing and new investors: the results of the analysis are reviewed and validated by the fund, its management company or other responsible entity Distributor Settlement instructions and DVP settlement Services Depobank of the funds fund custodian transfer agent Settlement instructions and DVP settlement Reports and data extraction We can provide data on an ad-hoc basis, according to our clients requirements Communication with investors The TA can liaise with the investors, for example to request additional information to complete the identification process, to provide them with other FATCA specific related communications, etc Reporting to the IRS The TA will support the preparation of the reports and filing to the IRS on behalf of the fund as Switzerland signed an IGA CSD: SIX-SIS Central bank Such reporting is expected to be validated by the fund or its management company prior to submission Fund manager: administers the fund and acts as its legal representative. : sends the order to the which transfers it to the TA). Distributor: where used, appointed by the promoter of the fund to distribute the fund. Depobank/custodian: Monitoring duties: reviews of compliance with the law and fund regulation, controls NAV calculation. Transfer agent duties: issue and redemption of units, collects and executes subscription and redemption orders. Custodian duties: ensures the safekeeping of the fund assets and processes all transactions, ensures the payment transfers. : calculates the fund NAV. CSD: Central Securities Depository SIX-SIS where transactions are settled and shares are issued for funds circulating in the CSD. It ensures the FATCA qualification of its members.

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16 The information contained within this document ( information ) is believed to be reliable but Services does not warrant its completeness or accuracy. Opinions and estimates contained herein constitute Services judgment and are subject to change without notice. Services and its subsidiaries shall not be liable for any errors, omissions or opinions contained within this document. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. For the avoidance of doubt, any information contained within this document will not form an agreement between parties. Additional information is available on request. Services is incorporated in France as a Partnership Limited by Shares and is authorised and supervised by the ACPR (Autorité de Contrôle Prudentiel et de Résolution) and the AMF (Autorité des Marchés Financiers). Services, London branch is authorised by the ACPR, the AMF and the Prudential Regulation Authority and is subject to limited regulation by the Financial Conduct Authority and Prudential Regulation Authority. Details about the extent of our authorisation and regulation by the Prudential Regulation Authority and regulation by the Financial Conduct Authority are available from us on request. Services, London branch is a member of the London Stock Exchange. BNP Paribas Trust Corporation UK Limited (a wholly owned subsidiary of Services), incorporated in the UK is authorised and regulated by the Financial Conduct Authority. In the U.S., Services is a business line of BNP Paribas which is incorporated in France with limited liability. Services provided under this business line, including the services described in this document, if offered in the U.S., are offered through BNP Paribas, New York Branch (which is duly authorized and licensed by the State of New York Department of Financial Services); if a securities product, through Corp. or BNP Paribas Prime Brokerage, Inc., each of which is a brokerdealer registered with the Securities and Exchange Commission and a member of SIPC and the Financial Industry Regulatory Authority; or if a futures product through BNP Paribas Securities Corp., a Futures Commission Merchant registered with the Commodities Futures Trading Commission and a member of the National Futures Association. Designed by the graphics department, corporate communications, Services March 0

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