FATCA: the unexpected financial institutions

By now, any ‘financial institution’ (as the man on the Clapham Omnibus would understand that term) would need to have had its head in the sand in order not to be aware of the impact of the Foreign Account Tax Compliance Act (FATCA) and its need to comply with this new regime.

However, the definition of ‘financial institution’ for the purposes of the FATCA rules is much broader than what the man on the Clapham Omnibus would imagine it to be. It includes, for example, professional trustees (other than individuals); trusts; family offices; and nominees (other than individuals).

Some financial institutions within these classes may therefore be forgiven for being unaware that they might have any obligations under FATCA. For example, it is quite possible that a family trust, managed by individual family members and holding a portfolio of stocks and shares that are managed on a discretionary basis by an investment management firm, would have no idea that they are within the scope of this new US regime — even though they may have nothing whatsoever to do with the US…

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