AFEP have released guidance to help firms determine whether they as Payment Institutions (“Member PIs”), member Electronic Money Institutions (“Member EMIs”) and member investment firms that sell currency options ("Member Investment Firms")are likely to fall within the scope of The Foreign Account Tax Compliance Act(“FATCA”) and The Common Reporting Standard (“CRS”) and consequently whether they need to be reporting any client balances under FATCA or the CRS.
FATCA is a United States federal law enacted by the U.S. on March 18, 2010 as part of the Hiring Incentives to RestoreEmployment (HIRE) Act. FATCA is implemented via intergovernmental agreements with the primary goal of combating tax evasion by U.S. taxpayers who hold financial assets and accounts abroad. FATCA requires foreign financial institutions (“FFIs”) to report, either to the U.S.Internal Revenue Service (IRS) or their own countries tax agency (for example,HMRC), information on assets, including money or accounts held by U.S.taxpayers, or by foreign entities in which U.S. taxpayers hold substantial ownership interest or assets.