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HMRC internal manual

International Exchange of Information Manual

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HM Revenue & Customs
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Notification requirement: Specified Financial Institutions: Financial Institutions and Specified Financial Institutions

Notification requirement: Specified Financial Institutions: Financial Institutions and Specified Financial Institutions

In broad terms Financial Institution will cover banks, building societies, insurers, fund managers, wealth managers, many investment entities, and similar businesses.  More help can be found on the definition of a Financial Institution at IEIM400600+.

Non-Reporting Financial Institutions are those listed within the CRS and those exempted under domestic law. There is guidance on Non-Reporting Financial Institutions within the UK at IEIM400920.

Both Financial Institution and Non-Reporting Financial Institution are defined terms within international agreements the UK has entered into to enable automatic exchange of information with other jurisdictions (see section VIII(A) of the OECD Common Reporting Standard).

Obligations on Financial Institutions are already in place under existing Regulations, so it is likely that if you are a Financial Institution in the UK you will know about it.

Specified Financial Institutions

The scope of the client notification requirement is Specified Financial Institutions –that is Financial Institutions that are not Non-Reporting Financial Institutions for the purposes of the DAC or CRS.  This is different to being a Reporting Financial Institution, which is a defined term under the agreements.

As well as excluding Non-Reporting Financial Institutions, “Reporting Financial Institution” derives its meaning from Participating Jurisdiction Financial Institutions (or UK Financial Institution).  The term Participating Jurisdiction Financial Institution excludes any overseas branch of the Financial Institution.

As the obligation applies to the wider term of Financial Institution the scope will include any branches of a Financial Institution that is a company, and defaults to the position that the Financial Institution as a whole maintains the financial account (see page 40 of the CRS Implementation Handbook).

Financial Institutions which are non-reporting for the CRS or DAC will not be included IEIM400920, and nor are any businesses that are only Financial Institutions for the purposes of FATCA.

Charities are specifically excluded from the obligation.