The United States estimates a loss of approximately US$-100billion through tax evasion every year. In an effort to improve compliance of US taxpayers who have foreign financial assets and offshore accounts, the Foreign Accounts Tax Compliance Act (FATCA) was enacted by the US Government. This Act essentially requires non-US financial institutions to identify and report on US individuals or entity account holders.
Recently the South African government agreed to and signed an inter-governmental agreement (IGA) with the US Internal Revenue Service (IRS) allowing for FATCA to be directly incorporated into local governmental law. The local FATCA laws will be phased in from July 2014 in order to comply with the timelines set out in the IGAs.
To enforce compliance, FATCA requires financial institutions such as banks to report information to their local Tax Authority about financial accounts held by US taxpayers and entities in which US taxpayers hold a substantial ownership interest (this will be aligned to the AML/KYC requirements which are set per jurisdiction).
The FirstRand Group, Rand Merchant Bank(RMB) and its various franchises, branches and subsidiaries, as well as our African and international subsidiaries are required to report on all our US citizen account holders (both individual as well as entities) and to disclose the account holders' names, tax identification numbers (TINs), addresses and accounts balances.
Over the next few months RMB will be required to identify potential US persons (individuals, financial institutions, entities incorporated in the US, as well as entities with substantial US owners) and obtain IRS forms/documents as applicable. To ensure we make every effort not to inconvenience you, we will be aligning the FATCA information gathering exercise as part of our normal KYC review process.
FATCA remediation deadlines:
With effect from 1 July 2014, RMB is required to ensure that all new clients are FATCA compliant. The additional information as required by FATCA will be integrated into the existing KYC process to minimise touch points with our clients.
We wish to assure you of our continued service and support and should you have any questions kindly contact your Relationship Manager.
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