Answers to the most frequently asked questions

FATCA

DISCLAIMER:

This document is intended as a summary, is for information purposes only and is general in nature. It should not be construed as tax or legal advice. Abu Dhabi Commercial Bank PJSC or any other member of its Extended Affiliated Group may not be held liable for any loss that results from reliance upon this information. Customers should seek professional legal and tax advice relevant to their specific circumstances.

FATCA Overview

1. What is FATCA?

FATCA stands for the Foreign Account Tax Compliance Act. It is a law enacted in the United States of America (U.S.) and is aimed at addressing perceived tax abuse by U.S. Persons through the use of accounts maintained with Foreign Financial Institutions outside the U.S.

2. Will ADCB implement FATCA?

In compliance with UAE Central Bank requirements, ADCB will implement and comply with FATCA. Branches and subsidiaries of ADCB outside the UAE will also comply with FATCA.

3. Is ADCB the only Bank affected by FATCA?

No. All Banks and Financial Institutions in the UAE will be affected by FATCA. However, each financial institution will have its own approach for implementing FATCA.

4. When is the effective date of FATCA?

The effective date of FATCA is July 1st 2014.

5. Who is impacted by FATCA?

FATCA will impact individual customers who exhibit any one of the indicia of U.S. status, and certain business customers with U.S. owners. Such customers will be required to provide additional information/documentation to confirm their FATCA status.

6. What documentation will I be requested to submit for FATCA purposes?

ADCB may request you to submit a self certification by completing one of the Internal Revenue Service (IRS) withholding certificates (W9 or W-8BEN/W-8BEN-E) to confirm whether or not you are a Specified U.S. Person, and to confirm if there are any U.S. Substantial Owners for business customers.

7. Where can I find the form that I need to complete?

You may find it on the IRS website www.irs.gov. The forms can also be found at all ADCB branches.

8. Where can I find more detailed information on FATCA?

For further information on FATCA, please visit: www.irs.gov/FATCA

9. What happens if I don’t provide the required forms?

If an ADCB customer has U.S. indicia and fails to confirm its U.S. status by providing a self certification, the account will be considered as a Reportable Account, and as such information related to such account may be reported to the UAE Central Bank, or to any other local tax authority as mandated by the UAE Central Bank. Additionally, ADCB may refuse to open new accounts and may restrict the products offered to customers who choose not to provide the required documents.

10. How often do I have to provide information for FATCA purposes?

Customers are expected to provide updated personal information and account details to ADCB as and when there is a change to this information.

11. What information will ADCB report to the local authorities?

The account information reported to the local authority will include but will not be limited to: Name, Address, U.S. Taxpayer Identification Number, Account number, Account balance/Value, details on certain payments made to such accounts and details on substantial U.S. owners for entities.

12. Does FATCA replace existing US tax rules that I already follow?

No, FATCA does not replace the existing US tax rules but adds to them. It is recommended you contact a professional tax adviser for more information.

Individual Clients

13. What are the indicia of U.S. status for individuals?

The following criteria are considered U.S. indicia for individual customers:

- US citizenship (passport or green card holder) or U.S. residency

- US place of birth

- US mailing or residence address (including P.O. Box)

- US telephone number (residence or mobile)

- Standing instruction to transfer funds to an account domiciled in the US.

- Power of attorney or signatory authority granted to a person with a US address.

- An ‘in care of’ or ‘hold mail’ address that is the sole address for the account holder as per ADCB’s  records.

Customers having any one of the above listed indicia will be required to provide additional information and/or documentation to confirm their U.S. status.

14. What does FATCA mean for me if I don’t have any U.S. Indicia?

If you don’t have any U.S. Indicia, FATCA will have no impact on your relationship with ADCB; however, we may still request you to confirm your non-U.S. status.

15. What does FATCA mean for me if I have U.S. Indicia?

If you have any one of the U.S. indicia, you will be asked to provide us with additional information/ documentation, to confirm your U.S. status. ADCB may also be required to report information on your account to the relevant UAE authorities as discussed above at 11.

16. If I have surrendered my U.S. citizenship (.e. am no longer a U.S. passport/green card) holder what are the documents required to prove the same?

A government issued identification document, in addition to a Certificate of Abandonment of Lawful Permanent Resident Status.

17. What happens if a joint account is held by a US person and a non-US person?

Balances of such accounts will be in scope for FATCA reporting, however personal information related to the U.S. person ONLY will be reported.

19. If I have a U.S.-dollar account or investment in US securities, does this classify me as a U.S. person?

Not necessarily, the definition of a U.S person is based on the account holder’s information, rather than the type of account that is held.

20. If I have dual citizenship with the U.S., am I considered a U.S. person?

Yes, please refer to the “What are the indicia of U.S. status for individuals” for further information.

21. I was born in the U.S., but have lived outside the U.S. my whole life. How does FATCA impact me?

Generally, if you were born in the U.S., you are considered a U.S. person, unless you have renounced your U.S. citizenship, and obtained a Certificate of Abandonment of Lawful Permanent Resident Status.

Business Clients

22. Is FATCA only applicable to U.S. entities?

No, FATCA may also impact certain Non U.S. entities with U.S. Substantial Owners.

23. What do I need to do if I am a business client with U.S. Owners?

You need to confirm your U.S. status by providing certain information. This information can be provided by completing the “ADCB FATCA Addendum”. Additionally, in some instances an additional IRS form may be required to declare U.S. owners.

24. What if I am unable to select any of the classifications mentioned on the form?

If you are unable to select any of the classifications, you should seek advice from a tax professional.

FATCA Glossary - Financial Entities

Intergovernmental Agreement (IGA)

Bilateral agreements between the US Department of the Treasury and non-US jurisdiction that facilitate implementation of FATCA. The model agreements enable Foreign Financial Institutions in the designated jurisdictions to comply with FATCA. There are currently two types of IGAs: Model 1 and Model 2.

FFI

Foreign Financial Institution. FATCA identifies any financial institution incorporated outside the U.S. as FFI.

Financial Institution

Any entity that acts as a Custodial Institution, a Depository Institution, an Investment Entity, or a Specified Insurance Company.

Depositary Institution

Any Entity that accepts deposits in the ordinary course of a banking or similar business.

Custodial Institution

Any Entity that holds, as a substantial portion of its business, financial assets for the account of others.

Investment Entity

Any Entity that conducts as a business (or is managed by an entity that conducts as a business) one or more of the following activities or operations for or on behalf of a customer:

 (1) Trading in money market instruments (cheques, bills, certificates of deposit, derivatives, etc.); foreign exchange; exchange, interest rate and index instruments; transferable securities; or commodity futures trading;

(2) Individual and collective portfolio management; or

(3) Otherwise investing, administering, or managing funds or money on behalf of other persons.

Specified Insurance Company

Any Entity that is an insurance company (or the holding company of an insurance company) that issues, or is obligated to make payments with respect to, a Cash Value Insurance Contract or an Annuity Contract.

UAE Financial Institution

Any Financial Institution resident in/organized under the laws of the UAE, but excluding any branch of such Financial Institution that is located outside the UAE, and any branch of a Financial Institution not resident in/organized under the laws of the UAE, if such branch is located in the UAE.

Partner Jurisdiction

The jurisdiction that has in effect an agreement with the United States to facilitate the implementation of FATCA.

Partner Jurisdiction Financial Institution

Financial Institution established in a Partner Jurisdiction, but excluding any branch of such Financial Institution that is located outside the Partner Jurisdiction, and any branch of a Financial Institution not established in the Partner Jurisdiction, if such branch is located in the Partner Jurisdiction.

Participating FFI

Financial Institution that has agreed to comply with the requirements of an FFI Agreement, including a Financial Institution in a Model 2 IGA that has agreed to comply with the requirements of an FFI Agreement.

Registered Deemed Compliant FFI

A Foreign Financial Institution incorporated in a country that is treated as having an Intergovernmental Agreement with the US Internal Revenue Service.

Non-participating FFI

Foreign Financial Institution (FFI) that is not a Participating FFI, a Registered Deemed-Compliant FFI or an Exempt Beneficial Owner, and that is not compliant with any of the key FATCA requirements. A non-participating FFI does not include a UAE Financial Institution or other Partner Jurisdiction Financial Institution.

Entity Wholly Owned by Exempt Beneficial Owner

  • Any foreign government, any political subdivision of a foreign government, or any wholly owned agency or instrumentality of any one or more of the foregoing; or
  • Any international organisation or any wholly owned agency or instrumentality thereof; or
  • Any foreign central bank of issue; or
  • Any government of U.S. territory; or
  • Certain retirement funds; or
  • Entities wholly owned by one or more other Exempt Beneficial Owners

Global Intermediary Identification Number (G.I.I.N.)

Each Participating or Deemed Compliant FFI will be issued a Global Intermediary Identification Number (G.I.I.N.) which will be used to identify this entity. The G.I.I.N. will be issued when registration with the IRS is successfully completed.

FATCA Glossary - Non-Financial Entities

Active NFFE

Active Non-Financial Foreign Entity (NFFE) means any NFFE that meets any of the following criteria:
(1) Less than 50 percent of the NFFE’s gross income for the preceding calendar year or other appropriate reporting period is passive income and less than 50 percent of the assets held by the NFFE during the preceding calendar year or other appropriate reporting period are assets that produce or are held for the production of passive income;
(2) The stock of the NFFE is regularly traded on an established securities market or the NFFE is a Related Entity of an Entity the stock of which is regularly traded on an established securities market;
(3) The NFFE is organized in a U.S. Territory and all of the owners of the payee are bona fide residents of that U.S. Territory;
(4) The NFFE is a government (other than the U.S. government), a political subdivision of such government (which, for the avoidance of doubt, includes a state, province, county, or municipality), or a public body performing a function of such government or a political subdivision thereof, a government of a U.S. Territory, an international organization, a non-U.S. central bank of issue, or an Entity wholly owned by one or more of the foregoing;
(5) Substantially all of the activities of the NFFE consist of holding (in whole or in part) the outstanding stock of, or providing financing and services to, one or more subsidiaries that engage in trades or businesses other than the business of a Financial Institution, except that an entity shall not qualify for NFFE status if the entity functions (or holds itself out) as an investment fund, such as a private equity fund, venture capital fund, leveraged buyout fund, or any investment vehicle whose purpose is to acquire or fund companies and then hold interests in those companies as capital assets for investment purposes;
(6) The NFFE is not yet operating a business and has no prior operating history, but is investing capital into assets with the intent to operate a business other than that of a Financial Institution, provided that the NFFE shall not qualify for this exception after the date that is 24 months after the date of the initial organization of the NFFE;
(7) The NFFE was not a Financial Institution in the past five years, and is in the process of liquidating its assets or is reorganizing with the intent to continue or recommence operations in a business other than that of a Financial Institution;
(8) The NFFE primarily engages in financing and hedging transactions with, or for, Related Entities that are not Financial Institutions, and does not provide financing or hedging services to any Entity that is not a Related Entity, provided that the group of any such Related Entities is primarily engaged in a business other than that of a Financial Institution;
(9) The NFFE is an “excepted NFFE” as described in relevant U.S. Treasury Regulations; or
(10) The NFFE meets all of the following requirements:
i. It is established and operated in its jurisdiction of residence exclusively for religious, charitable, scientific, artistic, cultural, athletic, or educational purposes; or it is established and operated in its jurisdiction of residence and it is a professional organization, business league, chamber of commerce, labor organization, agricultural or horticultural organization, civic league or an organization operated exclusively for the promotion of social welfare;
ii. It is exempt from income tax in its jurisdiction of residence;
iii. It has no shareholders or members who have a proprietary or beneficial interest in its income or assets;
iv. The applicable laws of the NFFE’s jurisdiction of residence or the NFFE’s formation documents do not permit any income or assets of the NFFE to be distributed to, or applied for the benefit of, a private person or non-charitable Entity other than pursuant to the conduct of the NFFE’s charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the NFFE has purchased; and
v. The applicable laws of the NFFE’s jurisdiction of residence or the NFFE’s formation documents require that, upon the NFFE’s liquidation or dissolution, all of its assets be distributed to a governmental entity or other non-profit organization, or escheat to the government of the NFFE’s jurisdiction of residence or any political subdivision thereof.

Passive NFFE

A Passive Non Financial Foreign Entity means any NFFE that is not (i) an Active NFFE, or (ii) a withholding foreign partnership or withholding foreign trust. A Passive NFFE is an entity for which financial income for the preceding calendar year was more than 50 percent of its gross income and more than 50 percent of the weighted average percentage of assets (tested quarterly) is assets that produce or are held for the production of financial income.

US Controlling Person

The term means the natural person who exercise control over the entity and should be interpreted consistent with the Financial Action Task Force Recommendation.

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