What is FATCA?
“FATCA” is the abbreviated term used in reference to the US Foreign Account Tax Compliance Act (enacted by chapter 4 of the Hiring Incentives to Restore Employment Act). The stated objective of the US Government is to reduce tax evasion by preventing “US Persons” from using offshore entities to launder money.
When did FATCA become law?
FATCA was enacted into law in March 2010.
When Does FFI Registration Become Effective?
The IRS portal for FFI registration opened on August 19, 2013. An FFI must register online by April 25, 2014 to be included on the first published IRS list of FFIs to be released on June 2, 2014. The earliest effective date of an FFI agreement is June 30, 2014.
Is JN Bank complying with FATCA requirements?
JN Bank and its affiliated companies are fully compliant to avoid severe restrictions that will be imposed on non-compliant financial institutions. We also want to serve all our customers transferring money to or from US banks.
What is required of JN Bank to comply with FATCA?
- Enter into an FFI agreement with the IRS that states its intent to comply with FATCA
- Conduct due diligence for new and existing accounts to classify account holders or investors as either U.S. or non-U.S.
- Report account information directly to the IRS or indirectly through their national government, which have signed Intergovernmental Agreements (IGA).
How has JN Bank implemented the changes?
- Identified members who are likely to be affected by FATCA
- Informed all our members about the US law and its requirements
- Trained employees facing customers, on FATCA requirements
What if I refuse to provide my information?
You must consent for your information to be disclosed to the US. However, with the Model 1 IGA, consent by a US status person or recalcitrant account holder may not be required since the data will be passed to the Jamaican authority, responsible for FATCA, who will share the data with the US Treasury Department. The US law also requires all financial institutions to withhold a 30% tax on accounts, where a person refuses to provide information to determine if he or she is a “US Person.”
What is meant by US Tax Classification?
US Tax Classification refers to either “United States Person” or “Foreign Person”.
- Dual citizen, one of which is US citizenship
- US citizen residing outside the US
- US passport holder
- Born in the US
- ‘Green Card’ holder
- Non-US citizen who has substantial presence in the US, for at least 183 days (6 months)
US Tax Form Type: When do I complete a W9 or W8 form?
What is a W8 and W9 form?
What is GIIN?
When Does Client Due Diligence Become Effective?
FATCA will enforce new account opening processes and procedures, effective July 1, 2014. A phased approach will be taken to enforce remediation on pre-existing accounts, based on whether the accounts are:
prima facie FFIs, whereby the deadline is December 31, 2014
high-value individual accounts, whereby the deadline is July 1, 2015
(3) all remaining accounts, whereby the deadline is July 1, 2016.
When Does Withholding Become Effective?
FATCA withholding on U.S. source (fixed or determinable, annual or periodical (FDAP)) income, which includes interest and dividends (new accounts) will begin effective July 1, 2014. Withholding on payments with respect to grandfathered obligations and associated collateral is also July 1, 2014. Withholding certificates and documentary evidence normally expiring on December 31, 2013 will now expire on June 30, 2014, unless a change in circumstances occurs that would otherwise render the withholding certificate or documentary evidence incorrect on unreliable. Withholding begins on gross proceeds from the sale of property that can produce U.S.-source dividends or interest on January 1, 2017. Further, FATCA withholding on foreign pass-through payments will begin no earlier than January 1, 2017
When Does Reporting Become Effective?
Effective March 31, 2015, FATCA reporting will begin for all Participating FFI’s U.S. accounts identified by December 31, 2014 for calendar year 2014 activity. It is expected that the same dates will apply in partner jurisdictions that have signed a Model 1 IGA.
Download FATCA Forms
JN Bank FATCA Help Desk
- 1 800 462 9003 (USA)
- 1 800 462 9003 (CAN)
- 0 800 328 0387 (UK)
- 1 888 991 4065-6 (JA)
- 954 535 5776 / 305 593 7976 (USA)
- 866 733 7173 / 876 936 6966 (JA)
What if I renounce my US Citizenship?
The decision to renounce your citizenship should be carefully discussed with your legal and/or tax advisor. While we are not in a position to advise you on this decision, we believe that you should consider the following:
- In the process of renunciation, you may be required to declare your tax status for the five years preceding your renunciation;
- Renunciation may give rise to issues related to inheritance of property where your spouse and heirs are concerned.
The US “Heart” Act of 2008 subjects American citizens who renounce their citizenship to an “exit tax”. The provisions of the tax apply to a “covered expatriate” who has a net worth that is at least $2 million (Net Worth test); whose average tax liability for the 5 years prior to his/her expatriation is over $145,000 (Income Tax test), and who does not certify that he/she met all U.S. tax obligations for the five years before expatriation (compliance test).
Being a “covered expatriate” has implication, including attracting a tax on gifts to US citizens. For example, If you renounce citizenship, then as a non-resident non-U.S. citizen, while you should still be able to transfer property free of U.S. estate taxes upon death to your U.S.- citizen spouse, your spouse will have to pay a 35% tax on everything received from you above the gift exemption limit (currently $13,000) because you renounced U.S. citizenship.
If you and your spouse were to both renounce U.S. citizenship, then you would be able to pass him/her unlimited non-U.S. assets at any time free of all U.S. taxes. If you give your U.S.-assets to anyone other than a U.S.-citizen spouse, then he/she will face the U.S. estate tax.
What if I refuse to provide my information?
At this time, no financial institution in Jamaica can hand over your information to the US without your consent. However with the Model 1 IGA, consent by a US status person or recalcitrant account holder may not be required since the data will be passed to the Jamaican authority tasked with FATCA. That authority will then pass the data on to the Treasury. The US law also requires all financial institutions to withhold a 30% tax on accounts, where a person refuses to provide information to allow the institution to determine whether or not they are a “US Person.”
What is JN Bank doing about compliance?
There are severe restrictions on Financial Institutions who opt out of complying with the FATCA Regulations and we have decided that the JN Bank and its affiliated companies will be fully compliant. This will allow us to continue to serve not only all our US members but also all our non US members who need to send money to or from US banks.
FATCA compliance requires FFIs in Jamaica and around the world to take steps to:
Enter into an FFI agreement with the IRS that states its intent to comply with FATCA
Conduct due diligence for new and existing accounts to classify account holders or investors as either U.S. or non-U.S.
Report account information directly to the IRS or indirectly through their national government, which have signed Intergovernmental Agreements (IGA)
JN Bank is proactively implementing changes to its current business practices in order to comply with FATCA, while best serving its clients and counterparties. We have taken steps to identify members that are likely to be affected by FATCA and are ensuring that all our members are adequately informed about the US law and its requirements. We have also trained our customer facing staff on the FATCA requirements, so that our customer service standards are maintained at a high level.
Does FATCA apply to remittance and loan payments?
The simple transfer of money from someone in the US to someone in Jamaica, or any other foreign country, will not be impacted by FATCA withholding. However, money and income earned that is transferred into a US account will be subject to the FATCA reporting requirements.
What types of financial institutions in Cayman will come under the law
Globally, the types of Financial Institutions which are likely to be affected by FATCA include: Commercial Banks, Building Societies, Insurance Companies with cash value contracts or annuities, Hedge Funds and Mutual Funds.
I have an account in Cayman, how will FATCA affect me?
If you are a “US person” and you have US$50,000 or more in savings or investment in Cayman, or any other non-US territory, you are likely to be affected by FATCA and may be required to provide additional information to facilitate an assessment of whether a reporting obligation arises in relation to your account.
How do I know if I am a “US Person”
You are deemed a “US Person” if you fall into any of the following categories:
You are a dual citizen, one of which is US citizenship
You are a US citizen residing outside the US
You are a US passport holder
You were born in the US
You are a ‘Green Card’ holder
You are a non-US citizen who has substantial presence in the US, for at least 183 days (6 months)
What does FATCA have to do with the JN Bank, its affiliated companies and its members?
FATCA requires all Foreign Financial Institutions (FFI) worldwide, to sign an agreement with the US Internal Revenue Service (IRS) to identify and report account information for US Persons, including:
Taxpayer Information Number (TIN);
Account balances, value, gross receipts and gross withdrawals or payments from the account