IEIM402565 - Due Diligence: General Requirements: Reporting Thresholds

Due Diligence: General Requirements: Reporting Thresholds

The FATCA Intergovernmental Agreement with the USA allows for certain thresholds below which a Financial Institution is not required to review, identify or report accounts to HMRC, thus removing the accounts from the need to carry out due diligence. With the exception of pre-existing entity accounts (see IEIM403260), these thresholds do not apply to reporting under the Common Reporting Standard.

For CRS2.0, there is a mandatory threshold to be applied to determine whether Specified Electronic Money Products (SEMPs) are Excluded Accounts. A Depository Account representing all SEMPs held for the benefit of a customer is an Excluded Account if the rolling average 90 day end-of-day aggregate account balance or value during any period of 90 consecutive days did not exceed USD 10,000 at any day during the calendar year or other appropriate reporting period. For guidance on applying this threshold, see IEIM401875.   

The UK regulations require all accounts to be the subject of due diligence and possible reporting but give Financial Institutions the option to elect to apply the thresholds to exempt certain accounts from this requirement. The election can be made in respect of some or all of the following categories of Financial Account and can also be applied to clearly identifiable groups of accounts, such as by line of business or by reference to the location where the accounts are maintained. The Financial Accounts that can be subject to election for reporting thresholds to apply are:

FATCA ONLY
  • Any individual Depository Account [see IEIM401540] with a balance or value not exceeding an amount equivalent to US$50,000. 
  • Pre-existing individual accounts [see IEIM402640] with a balance or value not exceeding an amount equivalent to US$50,000 as at 30 June 2014, unless the account becomes a High Value Account as at the end of a subsequent appropriate reporting period. 
  • Pre-existing individual accounts that are Cash Value Insurance policies [see IEIM401640] or Annuity Contracts [see IEIM401680] with a balance or value not exceeding an amount equivalent to US$250,000 as at 30 June 2014, unless the account becomes a High Value Account as at the end of a subsequent appropriate reporting period. 
FATCA and CRS
  • Pre-existing entity accounts [see IEIM403240] with a balance or value not exceeding an amount equivalent to US$250,000.

The rules on aggregation of account balances and values [see IEIM403560] must be applied for the purpose of determining whether or not an account is below the threshold for election.

Financial Institutions are required to aggregate all financial accounts maintained by it or by a related entity, but only to the extent that the Financial Institution’s computerised systems link the financial accounts by reference to a data element such as client number or TIN, and allow account balances or values to be aggregated. 

For the purpose of the election for individual Depository Accounts under FATCA, the aggregation is of Depository Accounts only.

Some examples of how the thresholds apply can be found at IEIM402570.