Fatca

FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA)

Loyal Bank Limited and its subsidiaries have been registered with the United States Internal Revenue Service (IRS) Foreign Account Tax compliance Act (FATCA) and have been issued Global Intermediary Identification Numbers (GIINs), which are now publically available on the IRS website. FATCA’s implementation in St. Vincent and the Grenadines (SVG) is being spearheaded by the Financial Services Authority (FSA), which is also the bank’s regulator. Loyal Bank Limited (LBL) and its members will be reporting directly to the St. Vincent and the Grenadines Inland Revenue Department (IRD), who is responsible for reporting to the US IRS. Loyal Bank Limited and its subsidiaries do not report directly to the US IRS.

FATCA overview

1. What is FATCA and how does it affect Loyal Bank?

FATCA stands for the Foreign Account Tax Compliance Act. FATCA is United States of America legislation enacted in March 2010 and which became effective on 1st July, 2014. It requires non-U.S.A. financial institutions, on pain of financial penalties levied on U.S.A. source income, to provide reports to the U.S.A. Internal Revenue Service (the U.S.A. IRS) regarding their customers who are U.S.A citizens and who hold accounts with the financial institution. Loyal Bank Limited is considered a Foreign Financial Institution (FFI) under this Act, and has registered as such.

Registration under FATCA by Loyal Bank is mandatory as it is required of us by the Government of St. Vincent and the Grenadines.

The Government of St. Vincent and the Grenadines (SVG) has entered into a reciprocal Inter-Governmental Agreement (IGA) with the U.S.A., IGA Model 1B. This is the same model adopted across the Caribbean and locally this means that the reporting of U.S.A. citizens who are clients by Loyal Bank Limited or its subsidiaries will not be made direct to the U.S.A. Internal Revenue Service but instead via the local SVG Inland Revenue Department (IRD).

The SVG IRD is responsible for sharing this information with the IRS and Loyal Bank will play no part in this process as our legal requirement is only to report to the SVG IRD as required by them.

We will not respond to any direct inquiries from the U.S.A. Internal Revenue Service as they should be directing these solely to the SVG IRD.

2. What is the impact of FATCA?

Banks and other financial institutions are required to report information on financial accounts held directly or indirectly by U.S.A. citizens. Loyal Bank Limited and its subsidiaries are fully FATCA compliant. We will therefore be reviewing our existing client base to confirm our customers’ FATCA status, and where necessary we may have to contact certain of our customers for further information and documentation.

3. How do I know if I am affected by FATCA?

FATCA legislation will affect any private or corporate clients who match one or more of the seven listed indicia of U.S.A. status and are treated as a U.S.A. citizen for U.S.A. tax purposes.

4. What are the indicia of U.S.A. status?

As per Notice 2011-34 the seven indicia of U.S.A. Status for the purposes of FATCA are as follows:

  • U.S.A. citizenship or lawful permanent residence (Green Card) status
  • A U.S.A. birthplace
  • A U.S.A. residence address or a U.S.A. correspondence address (including holding a U.S.A. Post Office Box number)
  • Standing instructions to transfer funds to an account maintained in the United States, or directions regularly received from a U.S.A. address
  • Currently listed U.S.A. telephone number
  • An "in care of" address or a "hold mail" address that is within the U.S.A. and is the sole address with respect to the client and
  • A Power of Attorney (POA) or signatory authority granted to a U.S.A. person with a U.S.A. address.

5. Is Loyal Bank Limited the only bank to be affected by FATCA?

No. All banks and other financial institutions globally, and all banks in St. Vincent and the Grenadines, will be affected by FATCA and must comply on pain of financial penalties imposed by the IRS on U.S.A. source income.

6. How frequently might I have to provide information for FATCA purposes?

FATCA is an on-going process. If your account information changes, we may have to contact you to obtain additional information or documentation so that we are able to update your classification under FATCA.

7. What will Loyal Bank Limited do if the information required by the bank under FATCA is not provided?

Loyal Bank Limited is committed to being fully compliant with FATCA and our compliance is required by SVG law. The bank may not open new accounts or offer additional products and services to customers who choose not to comply with the bank’s requests for documentation to establish a customer’s status under FATCA.

In some cases the bank may have to exit an existing relationship with customers who do not provide the required documentation when requested.

8. Can I instruct you not to provide information for FATCA purposes?

No. Compliance with FATCA by Loyal Bank is a legal requirement and we cannot accept any instruction to "opt out" or otherwise not comply with the law.

9. Can the bank advise me how to manage my information for FATCA purposes?

No. Compliance with FATCA by Loyal Bank is a legal requirement and we cannot give any advice, encouragement or suggestion as to how you might be able to do this but you may wish to consult an Attorney familiar with FATCA in your own country.

Non-compliance by the bank with FSATCA is not an option. The bank may have to exit an existing relationship with customers who do not provide the required documentation.

10. Will there be a cost to me if you provide information on me for FATCA purposes?

No. We will not charge our clients any additional fee if we have to provide information on them under FATCA.

11. What if I am assessed to owe tax to the IRS as a result of FATCA?

We cannot assist you with any dealings you may have with the U.S.A. IRS. Our legal duty under FATCA is to provide information to the SVG IRD when and as requested by them. Compliance with the FATCA requirements of the SVG IRD by Loyal Bank is a legal requirement.

12. What is reporting under FATCA likely to begin?

We will be guided on this by the SVG IRD but we believe reporting will begin in early 2015.

13. Can I contact the SVG IRD regarding reporting on me under FATCA?

No. The SVG IRD are under no obligation to advise you or respond to you concerning FATCA and any question or communication concerning FATCA should only be addressed to us (however see FAQ No. 9 wherein we are unable to offer you certain advice etc. concerning managing FATCA data).

 

GLOSSARY

Foreign Financial Institution (FFI)

AN FFI is a foreign financial institution. It refers to non-U.S.A. financial institutions such as banks, custodian institutions, investment funds and certain types of insurance companies.

Inter-governmental agreement (IGA)

An IGA is an agreement between the United States of America and specific countries to build FATCA compliance in to the country’s legal frame work so that it can be implemented in the country. An IGA will require financial institutions to provide the information on U.S.A. accounts which they hold either:

  • Directly to the IRS, or
  • To the local tax authority of the resident country

The Government of St. Vincent and the Grenadines has chosen to adopt the second option in common with other Eastern Caribbean States, and therefore we will be reporting to the local SVG IRD whenever and however required.

U.S.A. Citizen

For the purposes of FATCA the term 'United States of America citizen' means:

  • An individual born in the United States of America
  • An individual who has at least one parent who is a U.S.A. citizen
  • A former alien who has been naturalized as a U.S.A. citizen
  • An individual born in Puerto Rico
  • An individual born in Guam
  • An individual born in the U.S. Virgin Islands.