FATCA: The Long Arm of the IRS

How Foreign Financial Institutions Should Prepare for the United States
Government’s Effort to Combat Offshore Tax Evasion

BY
ELLEN ZIMILES, Managing Director, Head of Global Investigations & Compliance
JEFFREY LOCKE, FATCA Task Force Leader, Global Investigations & Compliance
RICHARD KANDO, FATCA Task Force Leader, Global Investigations & Compliance
TABLE OF CONTENTS
I. Introduction 1
A. How We Got Here 1
B. The Intent of FATCA versus Execution 1
II. Understanding Select FATCA Terms 2
A. FFI 2
B. U.S. Person or Owner 2
C. FFI Reporting Requirements 2
III. First Preview of the Complexities of FATCA Implementation 3
A. Pre-Existing Accounts 3
B. New Accounts 4
IV. Worldwide Coordination:
Key to Building a Strong FATCA Compliance Program 5
A. Publicity, Publicity, Publicity: Create an Awareness Program 5
B. Information Already Maintained on Our Clients versus
The Collection of Additional Information 6
C. The Headache Begins 7
V. Conclusion 8
BIOGRAPHIES 9

EXHIBIT A 10
FATCA: The FFI’s Preliminary Workflow Concerning
Pre-Existing Individual Accounts

EXHIBIT B 11
FATCA: The FFI’s Preliminary Workflow Concerning Pre-Existing
Entity Accounts

EXHIBIT C 12
FATCA: The FFI’s Preliminary Workflow Concerning New
Individual Accounts

EXHIBIT D 13
FATCA: The FFI’s Preliminary Workflow Concerning New
Entity Accounts
I. Introduction
A. HOW WE GOT HERE
In the past two years we have seen:

1. UBS AG enter into a deferred prosecution agreement and pay $780 million to the U.S.
government for maintaining undeclared offshore accounts for U.S. taxpayers;

2. more than a dozen U.S. taxpayers plead guilty or be charged with tax fraud for maintaining
undisclosed accounts and many others still under criminal investigation; and

3. thousands of U.S. citizens disclose to the Internal Revenue Service (“IRS”) their secret bank
accounts.

Indeed, the veil of bank secrecy in Switzerland has been shattered.

In addition to the efforts of the IRS and the U.S. Department of Justice to combat offshore tax evasion,
other countries have followed suit by purchasing account data from former bankers and pursuing the
tax gap resulting from citizens’ maintenance of previously undisclosed accounts. Moreover, the U.S.
Government’s efforts have culminated in the Foreign Account Tax Compliance Act (“FATCA”), which
mandates that a foreign financial institution (“FFI”) identifies U.S. taxpayers with accounts at the FFI
or suffer a 30% withholding on all United States sourced income payments to the FFI. To avoid the
withholding tax, which would be remitted directly to the IRS, FATCA requires FFIs to obtain and report
information on its accounts used in whole or in part by U.S. taxpayers (“U.S. Accounts”) to the IRS.
FATCA is likely the most far-reaching statute to combat tax evasion in recent history.

B. THE INTENT OF FATCA VERSUS EXECUTION

The goal of FATCA seems simple and to the point: to combat offshore tax evasion. When put into
practice, however, it becomes an extremely complicated process requiring coordination by personnel
not only across business lines of the FFI but also across the globe. Even though FFIs have until Janu-
ary 1, 2013 to comply, these complexities necessitate that the first steps of preparation should begin
immediately. After setting forth some background information on FATCA and IRS Notice 2010-601 (the
“Notice”), this article will address the three steps that all FFIs should start now: (1) create an aware-
ness program; (2) identify the information collected by the FFI through the Customer Identification
Program (“CIP”), Know Your Customer Program (“KYC”) or other relevant programs and (3) develop
and implement a program of systems, policies and procedures and corporate governance.

1
On August 27, 2010, the IRS issued Notice 2010-60, “Notice and Request for Comments Regarding Implementation of Information Reporting
and Withholding Under Chapter 4 of the Code”, which “provides preliminary guidance regarding priority issues involving the implementation” of
FATCA. Notice p. 1.

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 II. Understanding Select FATCA Terms
On March 18, 2010, FATCA was signed into law as part of the Hiring Incentives to Restore Employ-
ment Act (“the Act”).2 FATCA goes into effect on January 1, 2013 and provides the United States
Treasury and the IRS with oversight responsibility.

A. FFI
According to FATCA, an FFI is a foreign entity that: (1) accepts deposits in the ordinary course of a
banking or similar business, (2) as a substantial portion of its business, holds financial assets for the
account of others, or (3) is engaged (or holds itself out as being engaged) primarily in the business of
investing, reinvesting, or trading securities, partnership interests, commodities, or any interest in these
mentioned items.3

B. U.S. ACCOUNT:
U.S. PERSON OR OWNER
A U.S. Account is, generally, a financial account held by a specified U.S person or by an entity that,
directly or indirectly, had one or more “substantial” U.S. owners. FATCA defines a “substantial” U.S.
owner as a direct or indirect owner of: (1) more than 10% of the stock of a corporation; (2) more than
10% of the profit or capital interest in a partnership; or (3) an owner of any portion of a trust and the
holder of more than 10% of the beneficial interest of a trust. Investment vehicles owned by a U.S.
person, no matter what percentage of ownership, must be reported to the IRS.4

Additionally, the Notice allows for accounts with an average account value of less than $50,000 to be
classified as “other than a U.S. account.”5

C. FFI REPORTING REQUIREMENTS

FFIs will be required to report the following for all U.S. Accounts to the IRS: (1) the name, address
and taxpayer identification number for each individual or U.S owned foreign entity account holder, (2)
the account number, (3) the account balance or value and (4) gross receipts and payments from the
account.6

2
H.R. 2847, Title V-Offset Provisions, Subtitle A, Foreign Account Tax Compliance. According to the Act, FATCA added §§ 1471 though 1474 to the
Internal Revenue Code (“IRC”).
3
IRC §§ 1471(d)(4) and 1471(d)(5).
4
IRC § 1473(2).
5
According of the Notice, if the sum of the average the month-end balances or values for the year of all accounts maintained with the FFI by the
account holder is less than $50,000, the accounts can be excluded from the analysis of U.S. Accounts. The Notice also allows for the FFI to use
the time period for which it reports values to its account holder to determine the average value of accounts. The Notice, pp. 29 – 30.
6
IRC § 1471(c)(1).

2|
III. First Preview of the Complexities of
FATCA Implementation: Published
Guidance, IRS Notice 2010-60
The IRS’s first guidance in interpreting FATCA is over sixty pages long and contains new acronyms,
workflows and requirements that each FFI must implement. Below is a high level summary of a portion
of the Notice that discusses the collection of information to identify U.S. Accounts. It’s expected the IRS
will issue additional guidance regarding FATCA.

A. PRE-EXISTING ACCOUNTS
For accounts maintained in the name of individuals or entities and established prior to the signing of an
agreement (the “FFI Agreement”) between the IRS and the FFI (“Pre-Existing Accounts”)7, the Notice
allows the FFI to rely on “… electronically searchable information maintained by the FFI and associ-
ated with the account…”8 for indicia of potential U.S. status.9 For individual accounts,10 depending on
what indicia is identified through the electronic search, the FFI will have to request a Form W-9 or
Form W-8BEN and possibly other documentary evidence from the account holder to provide additional
evidence of the account holder’s status.11

7
In addition to entering in an agreement with the IRS, FATCA also mandates that there be a 30% withholding on United States source income
unless FFIs comply with reporting requirements. FATCA requires that FFIs:
1) obtain information to determine if the account is a U.S. Account;
2) comply with such verification and due diligence procedures as required with respect to U.S. Accounts;
3) report on an annual basis information relating to U.S. Accounts;
4) deduct and withhold a tax equal to 30% of certain specified payments;
5) comply with requests by the Secretary of Treasury for additional information regarding U.S. Accounts; and
6) obtain a valid and effective waiver if any foreign law would prevent reporting relating to U.S. Accounts.
IRC § 1471(b).
8
The Notice, p. 27.
9
According to Section III.B.2 of the Notice, Individual Financial Accounts – Identification by Participating FFIs for Purposes of § 1471, the indicia
for pre-existing individual accounts includes:
1) identification of any account holder as a U.S. resident or U.S. Citizen;
2) a U.S. address associated with an account holder of the account (whether a residence address or a correspondence address);
3) a U.S. place of birth for an account holder;
4) an “in care of” address, a “hold mail” address, a P.O. address that is the sole address on file;
5) a power of attorney or signatory authority granted to a person with a U.S. address; or
6) standing instructions to transfer funds to an account maintained in the United States or direction received from a U.S. address.
The Notice, pp. 26 and 27.
10
Attached hereto as Exhibit A is a flowchart regarding the analysis of Pre-Existing Accounts maintained by individuals to identify potential U.S.
Accounts, which is entitled “FATCA: The FFI’s Preliminary Workflow Concerning Pre-Existing Individual Accounts.”
11
The Notice provides a timeframe for completing additional analyses for those Pre-Existing Accounts maintained by individuals which were identi-
fied as a non-U.S. Account after reviewing electronically searchable information. The FFI has two years from the date of the FFI Agreement to
apply the steps for a new individual account holder if the pre-existing account’s value was in excess of $1,000,000 during the year preceding the
FFI Agreement to determine if the account holder should still be treated as a non-US Account. Within five years of the FFI Agreement, all individual
accounts analyzed using the Pre-Existing Accounts protocol with an account value equal to or more than $50,000 and identified as a non-U.S.
Account will be subject to the procedures for New Accounts. The steps to analyze new individual accounts are described below. The Notice, pp.
29 and 30.

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 For Pre-Existing Accounts maintained in the name of an entity, the workflow is much more cumber-
some as there are numerous categories in which an entity can be classified: (1) a Participating FFI, (2)
a Deemed Compliant FFI, (3) a Non-Participating FFI, (4) an entity for which FATCA does not apply, or
(5) a Non-Financial Foreign Entity (“NFFE”).12 If the account holder is another FFI, the FFI originating
the transaction has to determine if the beneficiary FFI is FATCA compliant or exempt from reporting.
If the beneficiary FFI is neither, the originating FFI must withhold 30% on the payment of U.S. source
income.

If the entity account holder is identified as a foreign entity that is not a FFI, there are additional tests to
determine if there is evidence that the entity is operating an active trade or business. This is equivalent
to a shell company test to determine if the account holder is nothing more than a company without
significant operations or assets aside from the account and possibly being used to disguise true owner-
ship of the account. If the account holder does not provide evidence of operating as an active trade or
business, the FFI has to identify substantial beneficial owners of the account. If any of these owners
are U.S. persons, the FFI has a reporting requirement.

When conducting the analysis of Pre-Existing Accounts, the workflow allows for the continual request
for additional information from the account holder. After a certain time of non-responsiveness, gener-
ally one or two years from the date of request, the account holder is classified as recalcitrant (“recalci-
trant account holder”), which triggers a withholding and reporting requirement for the FFI.

B. NEW ACCOUNTS13
For accounts established by individuals or entities after the FFI Agreement is effectuated with the IRS
(“New Accounts”), the work to determine if the New Account is for the benefit of a U.S. Person is similar
to the work you would complete for a Pre-Existing Account. The main difference is that FFIs are not al-
lowed to only rely on electronically searchable files, but the FFI has to use “… all information collected
by the FFI… regardless of whether such information is available in electronically searchable files.”14 As
such, FFIs would be well-served to begin including this information in electronic databases as soon as
practicable and prior to the January 1, 2013 FATCA effective date.

12
Attached hereto as Exhibit B is a flowchart regarding the analysis of Pre-Existing Accounts maintained by entities to identify potential U.S. Ac-
counts, which is entitled “FATCA: The FFI’s Preliminary Workflow Concerning Pre-Existing Entity Accounts.”
13
Attached hereto as Exhibits C and D, respectively, are flowcharts regarding the analysis of New Accounts maintained by individuals and entities
to identify potential U.S. Accounts. Exhibit C is entitled “FATCA: The FFI’s Preliminary Workflow Concerning New Individual Accounts” and Exhibit
D is entitled “FATCA: The FFI’s Preliminary Workflow Concerning New Entity Accounts.”
14
The Notice, p. 40.

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IV. Worldwide Coordination: Key to
Building a Strong FATCA
Compliance Program
After analyzing the Notice, it is important that each FFI begins to take the following three preliminary
steps: (1) create an awareness program, (2) identify the information already collected by the FFI on
its customers, and (3) develop and implement a program of systems, policies and procedures, and
corporate governance.

A. PUBLICITY, PUBLICITY, PUBLICITY:

CREATE AN AWARENESS PROGRAM
It is important that everyone in the organization is aware of the changes that will need to be made to
comply with FATCA. There will not be a “one-size fits all” solution, as each business entity of the FFI
may collect different information on their customers. Additionally, the awareness program has to start
early as U.S. personnel may have to persuade their counterparts and executive level business line
personnel at foreign branches of the FFI of the importance of the foreign branch’s compliance with
FATCA, a U.S. based law that requires FFIs demand more information of their clients. Although much
of the program implementation will likely fall on operations, compliance and tax personnel, it’s impor-
tant to spread awareness of FATCA to all relationship managers and client facing employees overseas
as these employees will likely be receiving client questions. As part of the awareness program, a FFI
should create a “FATCA Task Force” to identify all affected stakeholders and create an internal and
external awareness program.

1. More Responsibilities for Key Personnel: Developing a FATCA Task Force

Early on in the process, a task force should be assembled to determine how the FFI is going to
comply with FATCA. The team should include individuals with tax, CIP, KYC, Anti-Money Laun-
dering (“AML”), and operations responsibility, as much of the FFI’s initial compliance with FATCA
as it will be driven by information already maintained by the FFI. A member of the information
technology software development team should also be included because complying with FATCA
may necessitate building a new database of electronic information or leveraging current systems.

2. Parties Affected by FATCA

The FATCA Task Force must identify all stakeholders that may be affected by FATCA. This
should include domestic and foreign entities, subsidiaries, and business lines that will likely have
FATCA reporting requirements including transfer agents and custody businesses. Special atten-
tion should be paid to FFI operations in jurisdictions with enhanced secrecy rules. It may require
extra effort to comply with FATCA in these jurisdictions given that KYC information may not be as
abundant in these areas and foreign law may prevent the reporting of information by the FFI to
the IRS but for a waiver by the account holder.15 Moreover, these may be the areas most vulner-
able to U.S. government scrutiny.

15
FFIs are required to obtain a valid and effective waiver from the account holder if foreign law prohibits the reporting of certain information. If the
waiver is not obtained within a reasonable period of time, the FFI should close the account. IRC § 1471(b)(1)(F).

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 3. Internal and External Awareness

a. Get Ready: The Internal Awareness Program

An internal awareness program should be developed to teach FFI employees about

FATCA and its importance to the FFI. The internal awareness program should start at
the highest levels of the company, both domestically and abroad, to establish the
necessary “tone at the top”, and trickle down through the company to compliance
personnel and finally to client-facing relationship managers. The awareness program
should include the distribution of memorandums and emails as well as conference calls
and live training programs.

b. Prepare for Questions from Clients: External Awareness

A list of questions that will likely be asked by clients along with sample answers should
be drafted and shared with client facing personnel. This list, the “FAQs of FATCA,” should
be designed to ensure that the clients of the FFI, no matter where they are located,
receive consistent answers regarding FATCA and its importance to the FFI. The FFI
should also assess whether it is prudent to send a mailing to its customers describing
FATCA and the type of information that may be requested in the future from account
holders. This could help ease the shock when clients receive requests for documentation
from the FFI that it likely has not asked for before.

B. INFORMATION ALREADY MAINTAINED ON OUR CLIENTS

VERSUS
THE COLLECTION OF ADDITIONAL INFORMATION
After identifying all potentially affected groups and business lines, it is important to find out what pre-
viously collected information each group has regarding its client base. According to the Notice, for
pre-existing individual and entity accounts and for only a specified period of time, the FFI is allowed
to rely on the information it already maintains in electronically searchable files to identify potential
U.S. accounts. In addition to reviewing information available in electronically searchable files, it’s also
important to inventory and assess client information not maintained in electronically searchable files
as any changes to the collection of the information of account holders will likely take a considerable
amount of time to implement. For example, the FATCA compliance team may want to determine:

1. Whether there is a copy of a passport in every customer’s file;16

2. If all addresses associated with the account are maintained in a single system; and

3. Whether the account opening questionnaire needs to change to address the potential
identification of U.S. Accounts and indicia of potential U.S. status of the account holders,
including green card holders.

The account opening process may change significantly because of FATCA reporting requirements as much
of the FFIs ability to provide accurate information to the IRS is dependent on account opening documentation.

16
FFIs should be mindful of certain privacy laws regarding the transfer of information across borders when developing a new database or linking
previously developed databases. For example, see Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the
protection of individuals with regard to the processing of personal data and on the free movement of such data. Council Directive 95/46, 1995,
(EC). See also Law of the Republic of Indonesia Number 11 of 2008 Concerning Electronic Information and Transactions (2008).

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C. THE HEADACHE BEGINS:
PUTTING THE IRS GUIDANCE INTO PRACTICE
1. The Wish List

The FATCA Task Force, in close coordination with the application developer, should think about ag-
gregating necessary information for FATCA compliance in one electronic system or linking different
systems to decrease the number of databases that need to be searched to identify potential U.S.
Accounts and report on those accounts. The FATCA Task Force also needs to determine when infor-
mation maintained in a non-searchable format should be incorporated into a searchable database.

The first step to enhancing or creating a system to maintain the necessary CIP and KYC infor-
mation for FATCA compliance is to identify to the software application developer a wish list of
information that should be warehoused in the electronic system. The specifications of the new or
linked database(s) should be driven by the steps regarding the identification of U.S. Accounts,
according to the Notice. Specifically, at a minimum, the wish list should request the inclusion of
the following regarding the account holder:

a. All accounts

i. The aggregation of value of all accounts maintained across the FFI by each account
holder;

ii. The identification in the database of each account already identified as a U.S. account;

iii. A way to track correspondence sent to an account holder, including when it was sent,
and, if a response is necessary, when it is due; and

iv. The identification of a recalcitrant account holder.17

b. Individual Accounts

i. The U.S. address associated with any account;

ii. Where the account holder was born;

iii. Whether there is an “in care of,” “hold mail” or P.O. Box associated with the address of
the account holder;

iv. Whether there is a power of attorney for the account and also if that power of attorney
has a U.S. address;

v. Whether there are standing instructions for transfers from a U.S. address; and

vi. Whether the account holder provided to the FFI a Form W-9 or Form W-8BEN.

17
For a discussion of recalcitrant account holders see section III.A herein and the Notice, pp. 28 and 39.

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 c. Entity Accounts

i. Where entity account holders were formed or incorporated;

ii. Whether an entity account holder was previously identified as a FFI;

iii. Whether an entity account holder was identified as an exception to FATCA reporting by
the Act;18

iv. Whether an entity account holder operated an active trade or business; and

v. Whether the entity account holder was previously identified as having a U.S. owner or
beneficial interest by a U.S. Person;

In addition to the fields addressed above, the system should be able to maintain scanned docu-
ments to support each of the entries to ease the quality assurance review necessary for such a
robust warehouse of information and also be able to track the FFI’s decisions as to whether the
account is deemed to be a U.S. Account.

2. More Policies and Procedures and an Updated Corporate Governance Program

From a practical perspective, the FFI needs to incorporate the guidance provided by the Notice
into its current policies and procedures. An initial draft of the additional procedures should, at a
minimum, outline the steps to determine if individual and entity account holders are reportable to
the IRS. The policies and procedures will likely be updated each time another notice is published
by the IRS.

From a corporate governance perspective, the FFI may decide to integrate the FATCA compli-
ance program with compliance programs relating to CIP and KYC. This function may also be
placed in operations, tax compliance, a branch network or elsewhere. No matter where ultimate
responsibility resides, however, it is obvious business line and worldwide coordination is key.

V. Conclusion
Although FATCA does not go into effect for two years and the IRS has stated it will issue more guid-
ance, there are many practical steps FFIs can take to begin preparation of a FATCA compliance
program immediately. Additionally, if the past helps predict the future at all, FFIs may see other coun-
tries pass FATCA-type laws the way other countries followed the United States’ lead in pursuing the
offshore accounts of their own taxpayers.19

18
Entity account holders excluded from FATCA reporting requirements include:
1) 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;
2) Any international organization or any wholly owned agency or instrumentality thereof;
3) Any foreign central bank of issue; or
4) Any other class of persons identified by the Secretary of Treasury for purposes of this subsection as posing a low risk of tax evasion.
IRC §1471(f).
19
The Organisation for Economic Co-operation and Development (the “OECD”), over the years, has been seeking greater transparency and
an increase in the exchange of information to combat tax avoidance and evasion. For example, the OECD Global Forum Working Group on
Effective Exchange of Information, which consists of OECD Member countries as well as delegates from other jurisdictions, developed an
agreement to promote international cooperation in tax matters through exchanges of information. See http://www.oecd.org/document/37/0,3343,
en_21571361_43854757_44270949_1_1_1_1,00.html.

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Biographies
ELLEN ZIMILES is a Managing Director and Head of Global Investigations and Compliance in
Navigant’s Disputes & Investigations practice. She has more than 25 years of litigation and investi-
gation experience, including 10 years as a federal prosecutor. Ms. Zimiles is a leading authority on
anti-money laundering programs, corporate governance, regulatory and corporate compliance, fraud
control and public corruption matters. She has worked with a multitude of financial institutions prepar-
ing for regulatory exams, developing remediation programs and assisting organizations as a regulatory
liaison. Ms. Zimiles founded and served as CEO of Daylight Forensic & Advisory LLC, an international
investigations and compliance consulting firm which merged with Navigant in 2010. As an assistant
United States attorney in the Southern District of New York for more than 10 years, Ms. Zimiles served
in the civil and criminal divisions and was chief of the forfeiture unit for more than six years. She was
responsible for many high-profile money laundering, fraud and forfeiture cases.

JEFFREY LOCKE is an Associate Director in Navigant’s Disputes & Investigations practice, and
along with Richard Kando, a leader of Navigant’s FATCA Task Force. Mr. Locke specializes in regu-
latory compliance, anti-money laundering investigations and financial investigations. Prior to joining
Navigant, he was a prosecutor of white collar crime for the state of New York and he worked for the
United Nations Mission in Kosovo, where he conducted investigations into war crimes, corruption and
organized crime.

RICHARD KANDO is an Associate Director in Navigant’s Disputes & Investigations practice, and
along with Jeffrey Locke, a leader of Navigant’s FATCA Task Force. Mr. Kando primarily assists coun-
sel with anti-money laundering and other regulatory compliance related engagements and litigation
related matters. Prior to joining the consulting industry, Mr. Kando served as a special agent for the
Internal Revenue Service – Criminal Investigation Division in New York City where he investigated
allegations of tax evasion and other tax related criminal offenses, mail and wire fraud, embezzlement,
money laundering and identity theft. In recognition of his services as a special agent, he received the
U.S. Department of Justice – Tax Division Assistant Attorney General’s Special Contribution Award.

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10 |
EXHIBIT A
FATCA: THE FFI’S PRELIMINARY WORKFLOW CONCERNING PRE-EXISTING INDIVIDUAL ACCOUNTS

Account holder has previously been documented

as U.S. Person for tax purposes

Account holder has been identified through electronically END

Yes searchable files as: (1) U.S. Citizen or (2) U.S. Resident U.S. Account
Triggers
reporting
requirement
FFI searches through electronically searchable files to determine
if the account has indicia of potential U.S. status*

START Yes
Account balances
equal to or greater
than $50,000 on
average for the No Yes
year
(optional step) If W-9
received
within
one year
FFI obtains from client the following appropriate
documentation to determine U.S. taxpayer status:
(1) W-9 or (2) W-8BEN within one year of Bank’s
request for information

No

END If W-8BEN END

Non U.S. Account and /or other Recalcitrant Account Holder
No Yes documentation
No Triggers withholding and
No reporting requirement
received reporting requirement

* Notice 2010-60 identifies indicia of US accounts as the following:

(i) U.S. address associated with account holder;
(ii) U.S. place of birth identified for the account holder;
(iii) if account holder has only an “in care of” address, hold mail address or a P.O. Box address with respect to the account holder;
(iv) a power of attorney or signatory authority has been granted to a person with a U. S. address or
(v) standing instructions to transfer funds to an account maintained in the U.S. or directions received from a U.S. address.

This summary document is based on Navigant’s preliminary interpretation of FATCA and Notice 2010-60.
 EXHIBIT B
FATCA: THE FFI’S PRELIMINARY WORKFLOW CONCERNING PRE-EXISTING ENTITY ACCOUNTS

END
Documents establish non-U.S.
Person for Chapter 4
No reporting requirement
Account holder documented as U.S. Person for tax purposes

START
Entity Account FFI searches through electronically searchable files to determine if
Identified the account has indicia of potential U.S. status* END
U.S. Account
Triggers reporting requirement

No Yes

END Foreign Entity END

Excepted NFFE Active Trade FFI determines if entity account is: Recalcitrant Account Holder
Non U.S. Account Presumed U.S. Entity
or Business (1) FFI; (2) active trade or business Triggers withholding and
No reporting requirement or (3) non-active trade or business reporting requirement

END Non-Active Trade FFI END

Exception 1471(f) or Business (tentative Exception 1471(f)
No reporting requirement FFI has or obtains classification) No reporting requirement
documentation FFI has or obtains
NFFE documentation to
to determine
FFI has or obtains within two years determine entity status
entity status
END of the date the FFI Agreement END
Deemed Compliant FFI documents supporting excepted Deemed Compliant FFI
No reporting requirement NFFE status or identifying persons No reporting requirement
that have an interest in an entity

END No Yes END

Participating FFI Participating FFI
No reporting requirement No reporting requirement

END END END

Non-Participating FFI Identify individuals and other Non-Participating FFI
These include FFIs that do not specified U.S. persons that have an These include FFIs that do not
produce documentation within END interest in entity. END produce documentation within
one year of FFI Agreement Recalcitrant Account Holder U.S. Account Excepted NFFE one year of FFI Agreement
Triggers withholding and Triggers withholding and Triggers reporting requirement Non U.S. Account Triggers withholding and
reporting requirement reporting requirement No reporting requirement reporting requirement

* The IRS Notice 2010-60 provides the example of an entity incorporated in the U.S. as indicia of a U.S. entity.

| 11
This summary document is based on Navigant’s preliminary interpretation of FATCA and Notice 2010-60.
12 |
EXHIBIT C
FATCA: THE FFI’S PRELIMINARY WORKFLOW CONCERNING NEW INDIVIDUAL ACCOUNTS

Account holder has previously been documented

as U.S. Person for tax purposes

Account holder has been identified through electronically END

Yes searchable files as: (1) U.S. Citizen or (2) U.S. Resident U.S. Account
Triggers
reporting
requirement
FFI searches through all information collected by the FFI (CIP, KYC, AML, etc...)
whether or not such information is available in electronically searchable files to
determine if the account had indicia of potential U.S. status.*

START Yes
Account balances
equal to or greater
than $50,000 on
average for the No Yes
year
(optional step) If W-9
received
within
one year
FFI obtains from client the following appropriate
documentation to determine U.S. taxpayer status:
(1) W-9 or (2) W-8BEN within one year of Bank’s
request for information

No

END If W-8BEN END

Non U.S. Account and /or other Recalcitrant Account Holder
No Yes documentation
No Triggers withholding and
No reporting requirement
received reporting requirement

* Notice 2010-60 identifies indicia of US accounts as the following:

(i) U.S. address associated with account holder;
(ii) U.S. place of birth identified for the account holder;
(iii) any other indicia of potential U.S. status, including if an account holder has only an “in care of” address, hold mail address or a P.O. Box address with respect to the account holder;
(iv) a power of attorney or signatory authority has been granted to a person with a U. S. address or
(v) standing instructions to transfer funds to an account maintained in the U.S. or directions received from a U.S. address.

This summary document is based on Navigant’s preliminary interpretation of FATCA and Notice 2010-60.
 EXHIBIT D
FATCA: THE FFI’S PRELIMINARY WORKFLOW CONCERNING NEW ENTITY ACCOUNTS

END
Documents establish non-U.S.
Person for Chapter 4
No reporting requirement
Account holder documented as U.S. Person for tax purposes

START
Entity Account Use all information collected by the FFI (CIP, KYC, AML, etc...)
Identified to determine potential U.S. status of account holder* END
U.S. Account
Triggers reporting requirement

No Yes

END Foreign Entity END

Excepted NFFE Active Trade FFI determines if entity account is: Recalcitrant Account Holder
Non U.S. Account Presumed U.S. Entity
or Business (1) FFI; (2) active trade or business Triggers withholding and
No reporting requirement or (3) non-active trade or business reporting requirement

END Non-Active Trade FFI END

Exception 1471(f) or Business (tentative Exception 1471(f)
No reporting requirement FFI has or obtains classification) No reporting requirement
documentation FFI has or obtains
NFFE documentation to
to determine
FFI has or obtains within two years determine entity status
entity status
END of the date the FFI Agreement END
Deemed Compliant FFI documents supporting excepted Deemed Compliant FFI
No reporting requirement NFFE status or identifying persons No reporting requirement
that have an interest in an entity

END No Yes END

Participating FFI Participating FFI
No reporting requirement No reporting requirement

END END END

Non-Participating FFI Identify individuals and other Non-Participating FFI
These include FFIs that do not specified U.S. persons that have an These include FFIs that do not
produce documentation within END interest in entity. END produce documentation within
one year of FFI Agreement Recalcitrant Account Holder U.S. Account Excepted NFFE one year of FFI Agreement
Triggers withholding and Triggers withholding and Triggers reporting requirement Non U.S. Account Triggers withholding and
reporting requirement reporting requirement No reporting requirement reporting requirement

* The IRS Notice 2010-60 provides the example of an entity incorporated in the U.S. as indicia of a U.S. entity.

| 13
This summary document is based on Navigant’s preliminary interpretation of FATCA and Notice 2010-60.
 ELLEN ZIMILES
212.554.2602
ellen.zimiles@navigantconsulting.com

JEFFREY LOCKE
212.554.2694
jeffrey.locke@navigantconsulting.com

RICHARD KANDO
212.554.2698
richard.kando@navigantconsulting.com

www.navigantconsulting.com

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