Beware of FATCA Certifications Being Under OFAC Review

In a quiet news release delivered on 3/23/22, the IRS updated the FATCA FAQ’s (Q. 22) to inform FATCA Stakeholders that a registration status could be changed to under review with a message indicating “For more information contact the Treasury Department Office of Foreign Asset and Control (OFAC).  OFAC Sanctions Compliance is now at the forefront of an FFI’s livelihood. That said, Foreign Financial Institutions (FFI) that are questioning the effectiveness of their FATCA consultant’s training or advice should check their FATCA consultant’s history with other FFI local associates or FFIs in other jurisdictions regarding their FATCA consultant(s) experience.

An FFIs compliance status with FATCA is critical to the FFIs ability to continue operating as an “on-going concern” in the financial industry.  FFIs non-compliant with FATCA risk having payments withheld by counterparties, banking and or correspondent relationships terminated and have the FFI classified as a “Non-Compliant” entity. Bottom line, the consequences of being non-compliant may include the revocation of an entity’s FATCA status and, ultimately, the entity’s Global Intermediary Identification Number (GIIN) being removed from the FFI list.

FATCA Certifications

The IRS requires that some Foreign Financial Institutions (FFIs) submit a Certification of Preexisting Account (COPA) or Periodic Certification. The next scheduled deadline for FATCA Certifications is July 1, 2022.

The IRS Message

“If you have a FATCA certification due, and your registration status has been changed to under review with a message informing you to contact OFAC for more information, you will not be able to submit a FATCA certification at this time.  Once the registration status is under review, you no longer have access to the periodic certification and certification of pre-existing accounts link.

If the account is placed back into registration approved status you will receive a message on your message board informing you of the registration status change to approved, and you will then have access to submit the applicable certification(s). If this occurs near or after the certification due date, you will be provided with additional time to submit your FATCA certification(s).”

The Responsible Officer (RO)

The RO has many responsibilities and obligations and is the only person authorized to act on behalf of the FFI to represent the FATCA status of the FFI.   Certifying FATCA compliance of the FFI to the IRS and notifying the IRS of material failures or non-compliance with FATCA requirements is a daunting task. The RO has the responsibility of ensuring and collecting supporting evidence to back up the certification to the IRS.

FFIs and ROs ought to consult specialized FATCA training providers that have experience with the IRS, are fully knowledgeable on the U.S. Internal Revenue Tax Code and understand OFAC Sanctions Compliance Programs.  ©