Pre-paid cards, electronic money (e-money), and electronic wallets (e-wallets) pose numerous challenges for foreign financial institutions (FFIs) under the Foreign Account Tax Compliance Act (FATCA).

1. 5 AREAS
FFI’s NEED TO BE
AWARE OF WHILE
DETERMINING THE
SCOPE OF FATCA
Blog Article

2. 1
CASH RETENTION IN CREDIT
FFIs may not necessarily realise that they will all
fall within the scope of the definition of financial
account (depositary account) if cash is retained
in credit. This means that FFIs must carry out
FATCA due diligence, reporting, and withholding
obligations unless they are exempted.

3. 2
DEPOSITARY INSTITUTION
FFIs may not recognise that they may be exempt
from the definition of Depository provider under
the Electronic Money Issuers Regulations 2011,
but they still fall under the definition of Depository
Institution under FATCA.

4. 3
EXEMPTIONS UNDER IGA
The FFI must see if it can benefit from an
exemption under the relevant Inter-Govermental
Agreement (IGA). The FFI will first need to check
Annex II of its country's IGA to see if it can avail
itself of three exemptions:
(1) exempt beneficial owners
(2) deemed compliant financial institutions
(3) exempt products

5. 4
CONDITIONS FOR QCP
If no exemption is available the FFI must
check to see if it can fulfil the two conditions
required for the 'Qualified Credit Provider'
(QCP) registered deemed-compliant
exemption under FATCA regulations. These
are:

6. 1) that the FFI must be an FFI solely because it is an issuer or servicer of credit cards that accepts deposits
on its own behalf (or on behalf of a credit card issuer in the case of a servicer only), only when a
customer makes a payment in excess of a balance due with respect to the credit card account and the
overpayment is no immediately returned to the customer; and .
2) that the FFI must, on or before the date it registers as a deemed-compliant FFI, implement policies and
procedures to either:
(a) prevent a customer deposit in excess of US$50,000; or
(b) ensure that any customer deposit in excess of US$50,000 is refunded to the customer within 60
days. It should be noted that a 'customer deposit' does not refer to credit balances to the extent of
disputed charges, but will include credit balances resulting from merchandise returns.
CONDITIONS FOR QCP

7. 5
REPORTING STRUCTURE
If no exemption is available the FFI will have to
decide whether to
(1) elect not to identify or report certain pre-
existing and new individual accounts (election 1);
or
(2) elect to identify or report certain pre-existing
and new individual accounts (election 2).

8. If no exemption is available the FFI will have to decide whether to
(1) elect not to identify or report certain pre-existing and new individual accounts (election 1); or
(2) elect to identify or report certain pre-existing and new individual accounts (election 2).
Election 1 means the FFI is not required to identify or report pre-existing and new individual depository
accounts with a balance or value of US$50,000 or less by the relevant date.
Election 2 means the FFI must apply the Aggregation Rules and report on credit card accounts where:
(1) the balance exceeds US$50,000 (there are no other accounts); and
(2) the total aggregated amount of all Depository Accounts (including the credit card account) exceeds
US$50,000.
REPORTING STRUCTURE

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