FATCA Responsible Officer Certification FAQ

Certain FATCA statuses (see Question 2) of registered FFIs require the Responsible Officer of the FFI to certify to the IRS with respect to its compliance with FATCA. As required in the FFI agreement and the FATCA regulations, there are two certifications that have to be performed:

• The Periodic Certification requires the Responsible Officer of a Registered FFI to certify its compliance during the certification period of the previous three years. Responsible Officers of FFIs certify that they have a FATCA Compliance Program in place and have performed a Review, and that no Material Failures or Events of Default have been identified during the certification period. If a Responsible Officer is not able to confirm the Periodic Certification, they will be required to make a Qualified Certification.
• The Certification of Pre-Existing Accounts (COPA) is a one-time certification that ROs of certain (see Question 2) registered FFIs have to perform. They must certify that the due diligence for all accounts that were pre-existing has been performed, and that no formal or informal procedures were in place to avoid FATCA. The COPA was originally scheduled to be performed in 2016 but the IRS moved the due date to 2018.

Formally the FATCA certifications are initiated through the FATCA Online Registration System under “Periodic Certification” or “Certification of Pre-Existing Accounts” in the Activity Center. The certification process mainly consists of “Yes/No” elections which need to be selected by the Responsible Officer RO. Only the RO may make the selections.

In addition to adequately documenting the certification process, we recommend that you make sure that you have supporting documentation on file to document the decisions made during the certifications. For example, the first statement of the Periodic Certification requires the RO to certify that the FFI has established a FATCA Compliance Program. If a RO certifies this, we recommend sufficiently documenting in a way understandable to independent third parties how, when, and in what way such a program has been implemented and how it is being maintained.

Not all registered FFIs are required to perform both certifications. Refer to Question 2 to evaluate which certification to perform.

In general only registered FFIs in a Model 2 country are required to certify. There are, however, exceptions to this rule. Please see below. The following registered FFIs in a FATCA Model 2 IGA or non-IGA jurisdiction must perform a certification of preexisting accounts (“COPA”):

• Participating Foreign Financial Institution
• Reporting Model 2 FFI
• Registered Deemed-Compliant FFIs – Local FFI
• Registered Deemed-Compliant FFIs – Restricted Fund
• Sponsoring Entities of Sponsored FFI

The following FFIs in a FATCA Model 2 IGA or non-IGA jurisdiction must perform a periodic certification:

• Participating Foreign Financial Institution
• Reporting Model 2 FFI
• Registered Deemed-Compliant FFIs – Local FFI
• Registered Deemed-Compliant FFIs – Nonreporting Member of a Participating FFI Group
• Registered Deemed-Compliant FFIs – Qualified Collective Investment Vehicle - Registered Deemed-Compliant FFIs – Qualified Credit Card Issuer or Servicer
• Registered Deemed-Compliant FFIs – Restricted Fund
• Sponsoring Entities of Sponsored FFI
• Sponsoring Entities of Sponsored Direct Reporting NFFE
• Trustee of a Trustee Documented Trust (only if the Trust is in a FATCA Model 2 IGA jurisdiction)
• Direct Reporting NFFE

The following FFIs in a FATCA Model 1 IGA AND a FATCA Model 2 IGA or non-IGA jurisdiction must perform both the COPA and the Periodic Certification:

• Consolidated Compliance Group
• Reporting Model 1 FFI on behalf of Branches in FATCA Model 2 IGA or non-IGA jurisdictions.

The Periodic Certification by the FATCA Responsible Officer is due on or before July 1 of the calendar year following the end of the certification period.

The COPA has to be performed only once. The due date for the COPA is no later than the due date of the first Periodic Certification, i.e. on July 1 of the calendar year following the end of the certification period.

Not all registered FFIs have to certify at these dates. Variations of the certification dates are mostly due to the date of registration in the FATCA Online Registration System. Additionally, some changes made to the System since the registration may lead to a change in the certification deadline (Refer to Question 11). We recommend to carefully review your deadlines which are shown in the system.

• For those FFIs for whom you are the RO, carefully review and evaluate for which you are required to certify and for which you may not be required to certify.
• Make sure that you have all login information available for your registered FFIs that are required to certify.
• After logging in, make certain that you have renewed the FFI Agreement if required and that the status “Renewal of FFI Agreement” on the system dashboard shows that it was renewed or that the system shows that you are not required to renew (it may not, please refer to Question 9+10).
• Make certain that you select a detailed FATCA classification selection when starting the FATCA certification, even if you are not required to certify. The FATCA Online Registration System will update your certification requirements accordingly. Refer to Question 4.
• We recommend that you adequately document the elections made during the certification. You can review both certifications after submitting them by selecting “Certification History” below the message board. The system will present a summary of the elections made during the certification.

Originally, the FATCA Online Registration System did not allow you to select a detailed FATCA classification (for example “Registered Deemed-Compliant Local FFI” was missing). This year, the IRS made changes to the system to allow a more detailed selection. We strongly recommend making such a selection whether you are required to make a FATCA certification or not.

To initiate the detailed FATCA classification selection select either “Periodic Certification” or “Certification of Pre-Existing Accounts” in the Activity Center. The System will prompt you to make a selection (or to confirm an existing selection).

The following FATCA Final Regulations classification options are available:

• Direct Reporting NFFE
• Participating FFI, including a Reporting Financial Institution under a Model 2 IGA
• Registered Deemed-Compliant FFI that is a Local FFI
• Registered Deemed-Compliant FFI that is a Non-Reporting Member of a PFFI Group
• Registered Deemed-Compliant FFI that is a Qualified Collective Investment Vehicle
• Registered Deemed-Compliant FFI that is a Qualified Credit Card Issuer or Servicer
• Registered Deemed-Compliant FFI that is a Restricted Fund
• Reporting Financial Institution under a Model 1 IGA
• Sponsoring Entity of Sponsored Direct Reporting NFFEs
• Sponsoring Entity of Sponsored FFIs
• Sponsoring Entity of Sponsored FFIs and Sponsored Direct Reporting NFFEs
• Trustee of a Trustee-Documented Trust
• U.S. Financial Institution

If you are in a FATCA Model 1 IGA jurisdiction or are otherwise not required to certify (for example when making the COPA as Non-Reporting Member of a participating FFI Group), the system will inform you after making the detailed classification selection that you are not required to certify and ask you whether you want to continue with the certification or not. If you opt to not continue you will be forwarded back to the dashboard, where the respective certification will show as “Not required”.

Otherwise the System will show that the certification is required and will prompt you to continue with the certification.

Whether you have to perform both certifications, only one certification or no certification at all, we strongly recommend in any case to repeat this FATCA classification selection for both certifications (if available). We have encountered instances where the dashboard showed that the certification was not required but that the system nevertheless showed “Certification Required” only after making the detailed FATCA classification selection.

Please note that the available selections may not reflect your exact classification. This is especially relevant for Registered Deemed-Compliant Swiss Investment Advisors. Refer to Question 7.

Yes, you have to log in to the FATCA Online Registration System and review both the messages in the message board and the status of the certifications on the left side of the dashboard. The system should update and show that you are not required to certify (e.g. if you are in a FATCA Model 1 IGA jurisdiction) after making a detailed FATCA classification selection (Refer to Question 4).

Unfortunately, not all possible FATCA classifications are available when making the detailed FATCA classification selection. This is especially relevant for certain Model IGA FATCA classifications. The IRS recommends selecting the classification that “resembles your classification the most”. We are not able to make recommendations about every FATCA classification available, but will do so for the most common Swiss Model 2 IGA statuses:

We recommend that Swiss Local FFIs acting as Registered Deemed-Compliant Financial Institutions with Local Client Base under the Swiss Model 2 IGA select the Final FATCA Regulations “Registered Deemed-Compliant FFI that is a Local FFI” classification (as recommended in Chapter 5 of the SIF FATCA FAQ) and certify as such.

We recommend that Registered Deemed-Compliant Financial Institutions acting as Collective Investment Vehicles under the Swiss Model 2 IGA select the Final FATCA Regulations “Registered Deemed-Compliant FFI that is a Qualified Collective Investment Vehicle” (as recommended in Chapter 5 of the SIF FATCA FAQ) status and certify as such.

We recommend that Registered Deemed-Compliant Financial Institutions acting as Swiss Investment Advisor under the Swiss Model 2 IGA select the Final FATCA Regulations “Registered Deemed-Compliant FFI that is a Restricted Fund” classification and do not certify. Refer to Question 7.

As described in the SIF FATCA FAQ, the IRS confirmed that Swiss Investment Advisors will NOT have to certify. However, there are still unanswered questions from the IRS as to how to update the FATCA Online Registration System to make sure that the IRS is aware that you are acting as Swiss Investment Advisor. Fortunately, on November 29, 2018, the Swiss Association of Asset Managers (SAAM) made recommendations in this regard which are the following:

1. Make a detailed FATCA classification (see Question 4) selection by selecting “Periodic Certification” and select Registered Deemed-Compliant FFI that is a Restricted Fund.
2. The System will inform you that a certification is required, due to the fact that Registered Deemed-Compliant FFI that is a Restricted Fund have to perform a Periodic Certification.
3. Continue with the certification until you have to select whether you are (1) performing a certification, (2) not able to perform a certification or (3) not required to perform a certification. Select (3) that you are NOT REQUIRED to certify.
4. The System will ask you to state a reason why you are not required to certify. Explain that you are not a Registered Deemed-Compliant FFI that is Restricted Fund but instead a Registered Deemed-Compliant FFI Swiss Investment Advisor under the Swiss Model 2 IGA, that you are therefore not required to certify, and that you have selected the classification Registered Deemed-Compliant FFI that is a Restricted Fund because it was that status that resembled your status the most.
5. Repeat this process for the Certification of Pre-Existing Accounts (COPA).

Yes. FFIs in FATCA Model 2 IGA or non-IGA jurisdictions that are acting as registered FFIs and are also acting as a Sponsoring FFI Entity (or as Trustee of Trustee-Documented Trusts) are required to certify for both classifications. Please make sure that you have both logins available.

If you have renewed the FFI Agreement, please refer to Question 10.

If you do not have a FFI Agreement in place (any FFI other than a Participating FFI or a Reporting Model 2 FFI) you are not required to renew a FFI Agreement. However, the system may nevertheless show that the renewal of the FFI Agreement is overdue. This technicality is due to the System not allowing FFIs to select a detailed FATCA classification in the past.

Even if you do not have a regulatory obligation to renew a FFI Agreement that is not in place, we nevertheless recommend to at least clarify the renewal status in the System as follows:

The System may update the renewal status after making a detailed FATCA classification selection. If not, the System may show an option in the Activity Center to allow to renew the FFI Agreement. If the option is available, select whether you are required to renew the FFI Agreement or not. If you select that you are not required to renew the FFI Agreement, the status should change to “Not required –self determined”.

If these options do not work, we recommend waiting.

According to a statement published by the IRS in its FATCA FAQ the “overdue” renewal status can be ignored if all the following conditions are fulfilled:

• The Renewal Effective Date is 01/01/2017
• According to the message board, the Registration Status was “Approved”
• The FFI agreement renewal obligation was fulfilled (if there was any such obligation)

If you have not renewed the FFI Agreement and you were required to do so, the IRS may not accept your FATCA certification. We recommend contacting the FATCA Helpdesk immediately.

We have experienced that some changes to the FATCA registration performed after the initial FATCA registration (e.g. re-submittal of the registration or change of the status from Lead FI to Single FI) can lead to a change of the effective date of the FFI agreement. In this case, the certification period will be calculated starting from this new effective date. We recommend that you certify when the System requires you to do so.

No, the Sponsoring FFI should complete and submit one certification which covers all of its sponsored FFIs via its own (i.e. the Sponsoring FFI’s) account. The Sponsoring FFI may include up to 100 Sponsored FFIs in its certification. Due to the technical restrictions of the FATCA Online Registration System, an additional certification is required if there are more than 100 sponsored FFIs.

Once a certification is submitted, it is no longer possible to make any corrections to it or to delete it. You will have to submit an additional certification to submit a corrected certification. The new certification will NOT override the old one. The IRS will keep copies of all submitted certifications.

A material failure is the failure of the FFI to comply with its FATCA requirements as either the result of a deliberate action to avoid the FATCA requirements or due to a failure to implement sufficient internal controls to meet the FATCA requirements.

An event of default occurs if a registered FFI fails to perform material obligations required with respect to the FATCA due diligence, verification, withholding, or reporting requirements or if the IRS determines that the registered FFI has failed to substantially comply with the FATCA requirements.

Generally speaking, Material Failures are less serious than Events of Default and can be corrected. It is important to note that a Material Failure may constitute an Event of Default if the Material Failure occurs in more than limited circumstances.

There are no conclusive lists of Material Failures or Events of Default, but the Final FATCA Regulations and the FFI Agreement contain a few examples:

Possible Material Failures

• Failure to establish a compliance program that is in effect as of the date of certification.
• The deliberate or systemic failure of the FFI to report accounts that it was required to treat as U.S. accounts, withhold on passthru payments to the extent required, deposit taxes withheld, or accurately report non-consenting account holders or payees that are nonparticipating FFIs as required.
• A criminal or civil penalty or sanction imposed on the FFI (or any branch or office thereof) by a regulator or other governmental authority or agency with oversight over the FFI's compliance with the AML due diligence procedures to which it (or any branch or office thereof) is subject and that is imposed based on a failure to properly identify account holders under the requirements of those procedures.
• A potential future tax liability related to the FFI's compliance (or lack thereof) for which the FFI establishes, for financial statement purposes, a tax reserve or provision.

Possible Events of Default

• Failure to obtain, in any case in which foreign law would (but for a waiver) prevent the reporting of U.S. accounts, valid and effective waivers from holders of U.S. accounts or failure to otherwise close or transfer such U.S. accounts as required.
• Failure to significantly reduce, over a period of time, the number of account holders or payees that the FFI is required to treat as recalcitrant account holders or nonparticipating FFIs.
• Failure to establish or maintain a compliance program for fulfilling the FATCA requirements or to perform a periodic review of the FFI's compliance
• Failure to take timely corrective actions to remedy a material failure after making a qualified certification.
• Failure to make the initial certification required or to make the periodic certification within the specified time period.
• Making incorrect claims for refund under the collective refund procedures.
• Failure to cooperate with an IRS request for additional information or making any fraudulent statement or misrepresentation of material fact to the IRS.
• Any transaction relating to sponsorship, promotion, or noncustodial distribution for or on behalf of any Local FFI, that is an investment entity.
• Failure to inform the IRS within 90 days of any significant change in circumstances.
• If the FFI is designated by one or more FFIs that are members of an FFI group as a lead FI, failure to, without reasonable cause, inform the IRS within 90 days of an acquisition, sale, or change affecting the chapter 4 status of an FFI in the FFI group for which it is acting as lead FI.

Please note that Material Failures which were not corrected and Events of Default require the Responsible Officer to make a Qualified Certification and to disclose the nature of the Failures or Events that occurred.