FATCA
Foreign Account Tax Compliance Act
US law requiring foreign financial institutions to report information about US account holders to the IRS.
FATCA requires foreign financial institutions (FFIs) to identify and report US persons' account information to the US Internal Revenue Service or face withholding taxes on US-source payments. FFIs must register with the IRS, obtain Global Intermediary Identification Numbers (GIINs), and implement due diligence procedures to identify US account holders. The law aims to combat tax evasion by US persons holding assets offshore. Many countries have signed intergovernmental agreements (IGAs) to facilitate FATCA compliance and avoid conflicts with local privacy laws. FATCA has prompted global awareness of cross-border tax compliance and influenced similar initiatives like the Common Reporting Standard. Compliance requires significant technology and operational infrastructure for account identification and reporting.
Example
US person identification procedures, annual reporting to IRS, 30% withholding on non-compliant institutions