FATCA & CRS Compliance
Introduction
As part of our commitment to regulatory compliance and transparency,Al Masraf Bank adheres to the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS).These international standards are designed to prevent tax evasion through the automatic exchange of financial account information between jurisdictions.
What is FATCA?
The Foreign Account Tax Compliance Act (FATCA) is a United States federal law aimed at combating tax evasion by U.S.persons holding financial assets outside the U.S. FATCA requires foreign financial institutions (FFIs) to report information about financial accounts held by U.S.taxpayers to the Internal Revenue Service (IRS).
Key Points:
• FATCA applies to both individuals and entities.
• FFIs must identify and report U.S. account holders.
• Non-compliance can result in significant penalties, including a 30% withholding tax on U.S.-sourced income.
What is CRS?
The Common Reporting Standard (CRS) is an information standard for the automatic exchange of information (AEOI) regarding financial accounts on a global level. Developed by the Organization for Economic Co-operation and Development (OECD),CRS requires financial institutions to report information about non-resident account holders to their local tax authorities, who then share this information with the tax authorities of the account holders’ countries of residence.
Key Points:
• CRS is a global standard for the exchange of financial account information.
• It aims to combat offshore tax evasion and improve tax compliance.
• Financial institutions are required to collect and report information on account holders who are tax residents of other participating jurisdictions.
How We Comply
Al Masraf Bank is dedicated to full compliance with both FATCA and CRS requirements. Here are the steps we take:
1. Customer Identification: We identify and classify our customers according to FATCA and CRS criteria during the account opening process and periodically thereafter.
2. Documentation Collection: Customers are required to submit self-declaration forms (W-9, W-8BEN, CRS self-certification, etc.) to confirm their tax residency status.
3. Reporting: We report relevant account information to the local tax authority, which then shares it with the appropriate international tax authorities.
4. Due Diligence: Regular audits and checks are conducted to ensure ongoing compliance with FATCA and CRS regulations.
Customer Responsibilities
As a customer of Al Masraf Bank, you are responsible for:
• Providing accurate and timely information regarding your tax residency status.
• Submitting the required self-declaration forms and any additional documentation when requested.
• Informing us of any changes in your tax residency status promptly.
How to Submit Self-Declaration Forms
Customers are required to submit their self-declaration forms via our designated group email address for FATCA and CRS communications. Please ensure that all forms are fully completed and signed.
Group Email for Submission: FATCA.CRS@almasraf.ae
Frequently Asked Questions (FAQs)
Q: What happens if I don’t provide the required information?
A: Failure to provide the necessary information may result in the reporting of your account details to the relevant tax authorities and could lead to account restrictions.
Q: How often do I need to update my information?
A: You should update your information whenever there is a change in your tax residency status. Additionally, we may request periodic updates to ensure compliance.
Q: Will my information be kept confidential?
A: Yes, your information will be handled with the utmost confidentiality and reported only as required by law to the relevant tax authorities.
Which FATCA form the Customer to fill?
For FATCA compliance, customers are required to fill out different forms based on their specific circumstances. Here are the main types of FATCA forms that customers might need to complete:
1. Form W-9 (Request for Taxpayer Identification Number and Certification)
• Who should fill it out?: U.S. persons (including U.S. citizens and resident aliens).
• Purpose: To provide the U.S. Taxpayer Identification Number (TIN) and certify their tax status.
2. Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting)
• Who should fill it out?: Non-U.S. individuals.
• Purpose: To certify that they are not U.S. persons and to claim benefits under an income tax treaty (if applicable).
3. Form W-8BEN-E (Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities))
• Who should fill it out?: Non-U.S. entities (such as corporations, partnerships, etc.).
• Purpose: To certify that they are not U.S. persons and to claim benefits under an income tax treaty (if applicable).
Which CRS form the Customer to fill?
For CRS (Common Reporting Standard) compliance, customers are typically required to fill out self-certification forms. The specific form depends on whether the customer is an individual or an entity. Here are the main types of CRS forms:
1. CRS Individual Self-Certification Form
• Who should fill it out?: Individual customers..
• Purpose: To provide information on the individual’s tax residency and to certify their status for CRS purposes.
2. CRS Entity Self-Certification Form
• Who should fill it out?: Entities such as corporations, partnerships, trusts, and other legal arrangements.
• Purpose: Entities such as corporations, partnerships, trusts, and other legal arrangements.
3. CRS Controlling Person Self-Certification Form
• Who should fill it out?: Individuals who are identified as controlling persons of an entity (for example, beneficial owners, shareholders, trustees, etc.).
• Purpose: To provide information on the controlling person’s tax residency and to certify their status for CRS purposes.
Applicable Penalties:
For individuals, the penalties related to non-compliance with CRS (Common Reporting Standard) and FATCA (Foreign Account Tax Compliance Act) requirements under the Central Bank of the UAE can include the following:
CRS Penalties for Individuals:
1- Failure to Provide Correct Information:
Individuals who fail to provide accurate and complete information to their financial institutions (such as details regarding tax residency status or identification numbers) can face penalties of up to AED 20,000.
2- Providing False or Misleading Information:
Providing false or misleading information to avoid being reported under CRS can result in a fine of up to AED 100,000.
3- Failure to Update Information:
If an individual fails to update their information with their financial institution, particularly if their tax residency status changes, they may face fines ranging from AED 10,000 to AED 20,000.
FATCA Penalties for Individuals:
1- Non-Disclosure of U.S. Tax Status:
U.S. persons (citizens or residents) who fail to disclose their U.S. tax status to UAE financial institutions may face penalties up to AED 10,000. If the non-disclosure is determined to be deliberate or part of a pattern, higher fines and additional penalties may apply.
2- Failure to Provide Information or Documentation:
Individuals who do not provide the necessary documentation, such as a W-9 form or a self-certification form, may incur fines up to AED 20,000.
Additional Consequences:
• Account Restrictions or Closure: Financial institutions may also freeze or close the accounts of individuals who do not comply with CRS or FATCA requirements.
• Increased Scrutiny: Non-compliance can lead to additional scrutiny from the tax authorities in the individual’s country of tax residence, potentially leading to further penalties, interest charges, or other legal consequences.
• Criminal Liability: In severe cases of intentional evasion or fraud, individuals could face criminal charges, which may result in further penalties or imprisonment, depending on the severity and jurisdiction.
These penalties underscore the importance for individual’s customers to provide accurate, complete, and up-to-date information to financial institutions to comply with CRS and FATCA regulations.
For any questions or further assistance regarding FATCA and CRS, please contact our call center or visit the nearest Al Masraf Bank Branch.
By ensuring compliance with FATCA and CRS, Al Masraf Bank is committed to maintaining the integrity and transparency of our financial system. Thank you for your cooperation.
About
Tools
Resources
