FATCA Responsible Officer Checklist
Under the United States (US) Foreign Account Tax Compliance Act (FATCA) regulatory framework, Foreign Financial Institutions (FFIs) are required to appoint a ‘Responsible Officer’ (RO)[1] to oversee its compliance with the FFI Agreement[2] that it is required to execute with the US Internal Revenue Service (IRS). The RO is personally responsible for supervising a FFI’s FATCA compliance programme and is required to make detailed periodic certifications regarding FATCA compliance to the US IRS. Under FATCA there are two regimes for countries to opt for with regards to reporting requirements.
Under the ‘Model 1 Intergovernmental Agreement (IGA)’ framework FFIs are required to report all FATCA-related information to their own government agencies. Under the ‘Model 2 IGA’ FFIs are required to report information directly to the US IRS. Consequently, Model 1 FFIs are not required to appoint a RO whereas Model 2 FFIs are required to appoint a RO. It should also be noted that the RO’s obligations under FATCA should be taken seriously, as ROs that intentionally fill in IRS tax forms incorrectly can be penalized by the IRS for wilful perjury, with a financial fine of US$250,000, up to three years in jail, or both.
FATCA RO Checklist
By way of brief overview, a FATCA RO should ensure the following:
FATCA Compliance Oversight
The responsible officer (RO) or equivalent must have sufficient seniority to effectively oversee the FATCA compliance programme.
Knowledge and Professional Experience
The RO should possess adequate knowledge and professional experience in FATCA-related areas, including operations, anti-money laundering (AML), know your client (KYC), technology, tax, and compliance.
Accurate FATCA Registration
Ensure that IRS Form 8957 (FATCA Registration Form) is correctly filled out and submitted to the US IRS in a timely manner.
Certification of FATCA Procedures
The Chief Compliance Officer (CCO) or another equivalent-level officer of the FFI (e.g., the RO) must certify to the IRS upon completion of FATCA procedures for pre-existing individual accounts.
Up-to-Date Records
Keep the FFI’s records and information current via the FATCA Online Registration System, including timely updates to contact information and Points of Contact.
Documentation Library
Maintain a comprehensive library of documentation related to FATCA regulations to evidence compliance and meeting obligations under the FFI Agreement.
Review Process for W-8 Forms
Establish a review process to check submitted W-8 Forms for errors, omissions, and duplication of certifications, which can invalidate tax forms.
Periodic Compliance Reviews
The RO should periodically review the sufficiency of the FFI’s compliance programme and its adherence to the FFI Agreement to ensure that required periodic certifications are accurate (e.g., certification of compliance and FATCA due diligence procedures).
Integration with Existing Systems
The RO aims to integrate FATCA compliance programmes with existing AML, KYC, and other customer identification and credit risk systems.
Staying Updated with FATCA Regulations
The RO must stay current with FATCA and US IRS updates to ensure ongoing compliance.
Verification of Compliance
The RO verifies the participating FFI’s compliance with the FFI Agreement or ensures the performance of specified procedures by a person (including third-party consultants or external auditors) upon IRS request.
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[1] A RO means an officer of any participating FFI or Reporting Model 1 FFI in the participating FFI’s Expanded Affiliated Group (EAG), if that officer has sufficient authority to fulfil the duties of a RO, which include the requirement to periodically certify to the US IRS regarding the FFI’s compliance with its FFI Agreement.
[2] An FFI Agreement includes a Qualified Intermediary (QI) Agreement, a Withholding Foreign Partnership (WFP) Agreement, or a Withholding Foreign Trust (WFT) Agreement that is entered into by an FFI and that has an effective date or renewal date on or after 31st December 2013.
[3] The submission deadline for periodic certifications is 1st July 2018 which is now also valid for initial one-time certification (of due diligence for pre-existing accounts) and period certification.