Foreign Account Tax Compliance Act (FATCA)

What is FATCA?

FATCA is Foreign Account Tax Compliance Act which affects Financial Institutions (FIs) worldwide, aims at reducing tax evasion by United States (“US”) persons.

The Act mandates financial institutions* to:

Identify U.S persons holding financial accounts outside U.S and investors from other countries investing in U.S;
Report on U.S Individual and Legal Entity's foreign financial assets including U.S individuals who exercise control over the Legal Entity; and
A 30% withholding tax is imposed on the US source income of any FI that fails to comply with this requirement.

*U.S FDAP (Fixed, Determinable, Annual, Periodical) source Income examples are annuities, dividends, emoluments, interest, premiums, remunerations, rental, salary, wages, etc.

The following types of customers are required to disclose information for FATCA compliance:-

RHB must abide to FATCA requirements as it is registered with the U.S Inland Revenue Service (IRS) and had obtained a valid GIIN.

Is it applicable to me or my organization?

Individual Customers

FATCA applies to you if you have the following U.S indicia, which determine your FATCA status:

U.S citizen or resident - possess either U.S passport, U.S Green Card,
Substantial Presence Test*
U.S place of birth
U.S residence address, mailing address or P.O. Box
U.S telephone number
Standing Instructions* to pay a U.S account
An “in care of” or a “hold mail” address that is the sole address with respect to the customer
A power of attorney granted to a person with U.S address

Legal Entity Customers

FATCA applies to all legal entity customers.

To determine your FATCA status or classification, you may need to refer to your tax advisor or visit U.S Inland Revenue Service (IRS) website at www.irs.gov/FATCA for further details.

Please take note that RHB is not in the position to advice you on your tax status or classification.

What should I do if FATCA is applicable to me or my organisation?

You are required to declare your FATCA status by completed Self-Certification Forms and provide documentary evidence.

Where can I obtain the relevant Self-Certificate Forms?

You may obtain the relevant Self-Certificate forms based on the following:-

For Individual and Sole Proprietor customers, please provide completed Individual Self-Certificate to the Bank
- Individual Self-Certificate
- Individual FATCA & CRS Definitions and Interpretation
For Entity customers, please provide completed Entity Self-Certificate to the Bank
- Entity Self-Certificate
- Entity FATCA & CRS Definitions and Interpretation
- W-8BEN-E Form
- For Controlling Person(s), please provide completed Controlling Person Self-Certificate Form to the Bank

What will happen if I refuse to disclose the required information?

The bank may impose 30% withholding tax on U.S FDAP source income or terminate relationship with the customer.

What do I/ my organisation have to do if there is any change in my/ my organisation’s details or FATCA status?

For any changes of customer's details, the customer is required to inform and provide necessary documentary evidence to RHB within 30 days of change.

Where can I get more information on FATCA?

You can find detailed information on FATCA at www.irs.gov/FATCA

When will the requirements take effect?

Effective date of FATCA for the following:

For Individual – 1st July 2014
For Legal Entity – 1st January 2015

Are there any consequences for incorrect certification?

Penalties may be imposed by IRBM if considered to contravene with MY Legislation ranged from RM200 to RM20,000/up to 300% of tax undercharged/imprisonment for a term maximum 3 years, whichever applicable.

Last updated: September 2019

Glossary

Financial Institution	Financial Institution means a Custodial Institution, a Depository Institution, an Investment Entity, or a Specified Insurance Company.
Recalcitrant	Customer who refuses to provide or disclose FATCA information/ documentary evidence i.e.: Individual Self-Certificate, Entity Self-Certificate, Controlling Person Self-Certificate or Form W-8BEN-E.
NPFI	Non Participating Financial Institution is a financial institution that has not entered into an agreement with U.S IRS to comply with FATCA requirements and standards.
U.S Indicia	Indication that an individual is a U.S Person. Possession of U.S indicia does not mean that the client will be classified as a U.S person. U.S indicia is just an indicator.
Legal Entity	Legal Entity are customer who are classified as below: Association and Societies Sole proprietor Partnership Trust or Nominee Corporations Government and entity wholly owned by government Other registered entities
Passive Non U.S Legal Entity	Passive Non U.S Legal Entity are entity with 50% or more of the Non U.S Legal Entity's gross income for the preceding calendar year or other appropriate reporting is passive income and more than 50 percent of the assets held by the Non U.S Legal Entity during the preceding calendar year or other appropriate reporting period are assets that produce or are held for the production of passive income. Under the context of FATCA, passive income consists of: Dividends, including substitute dividend amounts; Interest; Income equivalent to interest, including substitute interest and amounts received from or with respect to a pool of insurance contracts if the amounts received depend in whole or part upon the performance of the pool; Rents and royalties; Annuities; Excess of gains over losses from the sale or exchange of property that gives rise to passive income described in the U.S Treasury Regulations; Excess of gains over losses from transactions (including futures, forwards, and similar transactions) in any commodities, but not including: Any commodity hedging transaction described in the U.S Treasury Regulations, determined by treating the entity as a controlled foreign corporation; Active business gains or losses from the sale of commodities, but only if substantially all the foreign entity's commodities are property described in U.S Treasury Regulations. Excess of foreign currency gains over foreign currency losses; New income from notional principal contracts defined in U.S Treasury Regulations; or Amount received under cash value insurance contracts.
Beneficial Owner	Person who benefits from the profit or income made by the company/ legal entity.
U.S Beneficial Owner	U.S Beneficial Owner must be either U.S citizen or U.S tax resident.
Substantial Presence Test	Physically present in U.S for at least 31 days during the current year and 183 days during the 3 years period.
Standing Instruction	Standing instruction for the bank to pay recurring amount to an account maintained in U.S.