AEOI & Economic Substance

The Maples Group is uniquely placed to provide legal advice and administrative solutions to clients on all aspects of the Automatic Exchange of Financial Account Information (“AEOI”) due diligence and reporting regimes such as FATCA and the OECD Standard for Automatic Exchange of Financial Account Information – Common Reporting Standard (“CRS”) with respect to British Virgin Islands, Cayman Islands, Irish, Jersey and Luxembourg financial institutions.

The British Virgin Islands, the Cayman Islands, Ireland, Jersey and Luxembourg have entered into inter-governmental agreements with the United States (the “US IGAs”) to give effect to the US Foreign Account Tax Compliance Act (“FATCA”) and a multilateral competent authority agreement (the “MCAA”) to implement CRS.  The British Virgin Islands, the Cayman Islands and Jersey have also entered into inter-governmental agreements with the United Kingdom (the “UK IGAs”) in broadly similar terms to the US IGAs to improve international tax compliance (“UK CDOT”).  The UK is a Participating Jurisdiction for CRS therefore there are no separate registration or reporting obligations regarding UK CDOT and all UK reporting has been pursuant to CRS from 2017 onwards.

AEOI is the collective term used to refer to FATCA and CRS.

Each of the British Virgin Islands, the Cayman Islands, Ireland, Jersey and Luxembourg has, where appropriate, passed laws (the “AEOI Laws”) to give effect to their AEOI commitments.  Under the AEOI Laws, all “Financial Institutions” will be required to comply with the relevant registration, due diligence and reporting requirements, unless they can rely on an exemption that allows them to become a “Non-Reporting Financial Institution” (as defined in the relevant AEOI laws) with respect to one or more of the AEOI regimes, in which case only the registration requirement would apply under CRS.  The AEOI Laws require each Reporting Financial Institution to, amongst other things (i) register with the United States Internal Revenue Service (“IRS”) to obtain a Global Intermediary Identification Number (in the context of the US IGA only), (ii) register with its local fiscal authority to notify such authority of its status as a “Reporting Financial Institution” or a “Non-Reporting Financial Institution” (in the case of CRS only); (iii) adopt and implement written policies and procedures setting out how it will address its obligations under CRS (iv) conduct due diligence on its accounts to identify whether any such accounts are considered “Reportable Accounts”, and / or (v) report information on such Reportable Accounts to the local fiscal authority.

Account holders in such Reporting Financial Institutions will be required to provide certain personal financial information, including certifications as to such account holder’s global tax residencies and tax identification numbers, to the Financial Institution.  The Reporting Financial Institution’s compliance with the AEOI Laws may result in the disclosure of the account holder’s financial information to the local fiscal authority which will transmit such information to the overseas fiscal authority relevant to a reportable account (e.g. the IRS in the case of a US Reportable Account) annually on an automatic basis.

The term “Financial Institution” catches entities that are depository institutions, custodial institutions, investment entities and specified insurance companies.  Depository institutions and custodial institutions are largely self-explanatory terms, and specified insurance companies will mostly be long-term insurers.  Investment entities is a term defined very broadly and catches most types of investment fund, investment managers and advisors, and other entities that might be service providers in fund management world.  An entity that is not a Financial Institution will be a non-financial entity and out of scope of the AEOI Laws although if that entity is an account holder of a Financial Institution it may in certain circumstances be required to confirm to such Financial Institution its AEOI status and, where applicable, details of its controlling persons.  If in doubt, please take appropriate legal advice as to whether an entity is in scope and any related compliance obligations.

The Maples Group provides constructive and insightful advice to a range of clients, including investment managers, collateral managers, fund administrators, trustees and investment banks, offering flexible and cost effective solutions that can be tailored to ensure clients meet the necessary requirements.

We can assist clients on all aspects of AEOI, with services including:

• Providing British Virgin Islands, Cayman Islands, Irish, Jersey and / or Luxembourg legal advice or assistance in relation to the potential application of FATCA and CRS, including entity classification, local and foreign tax authority registration and notification requirements, availability of reporting exemptions, self-certification and due diligence requirements.
• Drafting or reviewing language for incorporation into offering materials, constitutional and other documents, where relevant.
• Drafting or reviewing self-certification forms, sponsored entity agreements and delegation agreements.
• Drafting or reviewing written policies and procedures to comply with AEOI.
• Registering a client with the IRS and obtaining a Global Intermediary Identification Number (“GIIN”), and/or registration, notification and liaison with local authorities, as applicable.
• Classification, validation and remediation of pre-existing accounts (where applicable).
• Onboarding new accounts to ensure required data is captured, and obtaining self-certification forms (or equivalent) and due diligence documentation for validation up front to facilitate compliance.
• Preparation and filing of reports that are compliant with applicable legal requirements.
• Sponsoring entity services – taking responsibility for FATCA compliance on behalf of the client, including performing all initial and ongoing due diligence to identify any reportable accounts, GIIN registration and reporting where applicable.