1. FATCA NEWS
Final FATCA Regulations Released
After a long time on the starting blocks, the FATCA compliance race is now on following the release of the
regulations by the US Treasury Department and Internal Revenue Service (IRS) on 17 January. First enacted in
2010, FATCA has been a source of uncertainty ever since. Until now, firms have been irresolute as to the exact
nature of the regulations and how they are to be enforced. The final regulations bring clarity to what has
become an area of great concern for those working in the financial services industry.
There are no major surprises contained within the document. At 544 pages, it provides significant additional
guidance and makes some concessions based on comments received from the financial services industry.
Despite requests from financial institutions to further delay the timeframes published in Announcement 2012-42,
the implementation dates remain the same. With the first effective date less than a year away, the industry
now has to face the challenge of ensuring compliance in a timely fashion. Registration (or Foreign Financial
Institution (FFI) Agreement execution) must be completed for all FFIs, within and without Intergovernmental
Agreement (IGA) countries, by 25 October 2013 in order to be included in the IRS's list of participating or
registered deemed compliant FFIs by December 2013. If they are not included on this list, firms may not be
able to avoid withholding for new accounts or contracts on 1 January 2014.
The final regulations:
 Confirm the step-by-step process for U.S. account identification, information reporting, and
withholding requirements for FFIs, other foreign entities and U.S. withholding agents, and give clarity on
the type of payments which will be subject to a 30% withholding tax, and the obligations of financial
institutions caught by the rules.
 Reduce the burden of FATCA compliance by raising the exemption threshold from USD 50,000 to USD
250,000 for pre-existing accounts held by entities and for pre-existing accounts that are cash value
insurance and annuity contracts.
 Expand the categories of FFIs that are deemed FATCA compliant without the need to enter into an
agreement with the IRS. Consequently, some types of retirement funds, life insurance, and other low
risk products will not be subject to a withholding tax. The new regulations also detail the types of
passive investment entities that must be identified and reported by financial institutions.
 Co-ordinate with IGAs. FFIs covered under IGA Model 1 are not required to follow the final regulations,
but FFIs covered under IGA Model 2 are, except to the extent expressly modified by the IGA Model 2.
These IGAs are considered being valid (i.e. applicable) even though the respective local law or
changes to the law may not yet have been enacted.
 Provide new rules for Insurance Contracts and Companies. The final regulations clarify the
circumstances in which insurance companies will be treated as FFIs, and when insurance contracts will
be treated as financial accounts subject to reporting or withholding under FATCA. Generally, an
insurance company will be treated as an FFI only if the insurance company, or an affiliate, issues cash
value insurance contracts or annuity contracts. Such contracts will be treated as financial accounts
under FATCA.
 Describe the registration process that FFIs will need to follow. The IRS Portal will be in operation from 15
July 2013 for registration. On 2 December 2013, information on who has registered will be published.
 Detail the compliance, certification and audit processes that need to be followed by FFIs. This
includes the requirement for periodic reviews of FATCA compliance, and the completion of a
compliance certification by a responsible compliance officer every three years.
Dion Global Solutions
Australia | Brazil | Canada | Chile | Germany | Hong Kong | India | Indonesia | Luxembourg | Malaysia | Mexico | New Zealand |
Singapore | Spain | United Arab Emirates | United Kingdom | United States of America | Vietnam
www.dionglobal.com | connect@dionglobal.com

2. Key Dates for FATCA compliance in 2013
15 July FATCA registration portal will be accessible for registration no later than 15 July
2013
15 October IRS to start issuing FATCA registration numbers (GIINs) no later than 15 October 2013
25 October Last date by which FFIs should register with IRS to ensure inclusion in the December
2013 IRS FFI list
2 December First list of participating and deemed compliant FFIs to be published by IRS
31 December FFIs must have:
 Implemented new customer on-boarding process
 Implemented processes, procedures and systems for identifying
withholdable payments
 Identified FATCA status to correspondent banks and other FFIs
 Trained staff
 Provided customer communication on FATCA
 Updated forms and legal conditions for products and services
Dion’s view
The final regulations, along with the IGA templates, now provide all the details required for financial firms to
understand how FATCA will be implemented and what implications the regulations will have on their business.
With the release of the regulations, we now expect to see many more countries signing IGAs over the coming
weeks and months.
For those firms that have not yet started their FATCA compliance program, the clock is now well and truly
ticking. It is of utmost importance that they begin an immediate review of their business and systems. For those
that have already begun this process, the final regulations demonstrate the need to have a flexible, strategic
solution implemented in order to cater for any future regulation changes.
To read more about Dion’s approach to FATCA and classification, please see the whitepaper, ‘Intelligent
Compliance: Finding a solution to FATCA and all that follows’ available for download at www.dionglobal.com.
For more information, contact connect@dionglobal.com or speak to your local Dion representative.
Dion Global Solutions
Australia | Brazil | Canada | Chile | Germany | Hong Kong | India | Indonesia | Luxembourg | Malaysia | Mexico | New Zealand |
Singapore | Spain | United Arab Emirates | United Kingdom | United States of America | Vietnam
www.dionglobal.com | connect@dionglobal.com