Professional Documents
Culture Documents
May 2016
IMPORTANT DEFINITIONS
Custodial Institution
Any entity that holds, as a substantial portion of its business, financial assets for the account of others;
Substantial portion - Income attributable to the holding of financial assets and related financial services >= 20% of its gross income during
3 financial years preceding the year in which determination is made or the period during which the entity has been in existence, whichever is
less.
Entities that safe keep financial assets for the account of others, such as custodian banks, brokers and central securities depositories,
would generally be considered Custodial Institutions
Investment Entity
Test
Explanation
Trading Test
Met if an entity is engaged in Trading in money market instruments; foreign exchange; exchange, interest rate and index
instruments; transferable securities; or commodity futures trading; or Individual and collective portfolio management; or
Otherwise investing, administering, or managing financial assets or money on behalf of other persons
Managed by Test
Met if the entity is managed by, or the financial assets are managed by, another FFI that is a depository or custodial
institution, specified insurance company or Class A investment entity
IMPORTANT DEFINITIONS
A Custodial Account
- An account (other than an insurance contract or annuity contract), for the benefit of another person, that holds one or more financial
assets
CRS
Custody, account maintenance, and transfer fees; commissions and
fees earned from executing and pricing securities transactions;
Income earned from extending credit to customers with respect to
financial assets held in custody by the entity (or acquired through
such extension of credit); income earned on the bid-ask spread of
financial assets held in custody; and
Fees for providing financial advice with respect to financial assets
held in (or potentially to be held in) custody by the entity; and for
clearance and settlement services
PRODUCTS IMPACTED
Products
Broker and DP
Portfolio Manager
Custodial
Institution
Investment
Entity
Investment
Entity
Depository
Participant
Broking
PMS
IMPORTANT DEFINITIONS
Financial Institutions With Local Client Base
Conditions for FI:
Identify resident account holders for either information reporting or withholding of tax with respect to FA held by residents or for satisfying
the due diligence requirements under PMLA;
Policies/procedures are consistent with Rule 114 H, preventing FI from providing FA to any non-participating FI and monitor whether FI
maintains FA of any reportable person who is not resident in India or any Passive Non-Financial entity;
If any non resident reportable account or a passive non-financial entity is identified, FI shall report such FA as if FI was a reporting FI or close
such FA;
In case of pre-existing account of an individual not resident in India, FI to review account as per Rule 114H to identify if it is reportable
account or FA held by a non-participating FI and report such account as required;
Must not have policies/practices which discriminate against opening or maintaining FAs for individuals who are specified U.S. persons and
residents of India
FATCA vs CRS
Key Requirements
Registration Required?
What is a:
pre-existing account?
new account?
FATCA
CRS
No
BROKING AND DP
Broker / DP
Custodial
Institution
Investment
Entity
No
20% or more of
gross income
<20% of gross
income
Registration
Holds Financial
Account?
Exempt
Yes
Deposited
with?
NPFFI
PFFI
No
Exempt
Reporting
PMS
No
PMS
Pool
Account
Non-Pool
Account
Custodial
Institution
Investment
Entity
20% or more of
gross income
<20% of gross
income
Registration
Holds Financial
Account?
Exempt
NPFFI
PFFI
Yes
Deposited
with?
No
Reporting
Exempt
REGISTRATION REQUIREMENT
REGISTRATION REQUIREMENT
FATCA:
CRS:
No registration requirements;
What if the activities undertaken by the broker is restricted to the extent of rendering investment advice, managing portfolio and executing
trades for and on behalf of customer that maintain their account with a Participating Financial Institution?
Non-Reporting Financial Institution for FATCA purposes and therefore, no registration requirements;
No specific exception under CRS regulations. However, common exception under the guidance note issued by Income-tax for the
implementation of FATCA / CRS.
Broker may have to carry out due diligence with the financial institution of its customers
TIMELINES
Reportable
Account
Threshold Limit
Account Opening
Period
Due Diligence
timelines on
/ before
Form 61B
Reporting date
31 December
2015
31 May 2016
30 June 2016
31 May 2017
30-June 2016
31 May 2017
30 June 2017
31 May 2018
30 June 2016
31 May 2017
Individual Accounts
U S Reportable
Account
All Accounts
Upto 31 December
2015
Entity Accounts
U S Reportable
Account
Other Reportable
Account
Upto 31 December
2015
Reportable Account
Period
U S Reportable
Account
All Accounts
01 July 2014 to 31
December 2014
10 September 2015
Account opening
31 May 2017
01 January 2015 to 31
August 2015
01 September 2015 to
31 December 2015
Other Reportable
Account
All accounts No
threshold
WAY FORWARD
WHAT TO BE REPORTED
WHAT IS TO BE REPORTED
Key fields; and
Declarations
A Pop up with the required details appears on the screen. Please find enclosed the screenshot in the next slide;
Enter all the details and click on Add Authorised Person;
A confirmation email on successful Addition of Authorised Person on the registered email id;
Confirmation email with an activation link shall be sent on the Authorised Persons email id along with an OTP through
SMS;
The Authorised person shall be required to click on the Activation link and enter the PIN and password and confirm the
password.
THANK YOU
Kriyang Karia
Associate Director
BDO INDIA LLP
Direct: +91 22 2439 3651
Mobile: +91 98330 06952
kriyangkaria@bdo.in