On March 26, 2015, the US Securities Industry and Financial Markets Associations (SIFMA) sought clarification on question 10 in the FATCA FAQs (February 2, 2015) from the US Treasury. SIFMA's members are concerned that the answer to FAQ 10 under "General Compliance" appears to be inconsistent with guidance in several model 1 IGA jurisdictions, including Canada and the United Kingdom. FAQ 10 forbids an FFI from opening an account if self-certification cannot be obtained when the account is opened. However, in paragraph 9.15 of Guidance on Enhanced Financial Accounts Information Reporting: Part XVIII of the Income Act (December 2014), the CRA says:
A financial institution is required to make reasonable efforts to obtain a self-certification in connection with the account opening process from an account holder who opens a new financial account that is required to be reviewed. If a self-certification is not provided by an account holder or the reasonableness of a self-certification cannot be confirmed, the account is reportable.
In the United Kingdom, HMRC provides the same guidance in section 6.4 of Implementation of the International Tax Compliance (United States of America) Regulations 2014: Guidance Notes (August 28, 2014): "In the absence of a valid self certification being provided by the account holder, the account would become reportable."
SIFMA recognizes the potential compliance risk to FFIs and US FIs operating in Canada and strongly recommends in its letter to the US Treasury that "the competent authorities of the relevant jurisdictions should meet to resolve this disagreement and, if necessary, amend the relevant provisions of the IGAs as appropriate." SIFMA also requested that once the disagreement is resolved, a financial institution should be given "an adequate period of time to make necessary updates to [its] processes and procedures to comply with any new guidance and/or changed interpretation."
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