100600 – Financial Institutions

The various UK regulations for automatic exchange of financial account information impose obligations on UK financial institutions to identify, maintain and report information about the tax residence (which includes citizenship in the case of the USA), of individuals and entities for whom they maintain financial accounts. Under the ‘wider approach’ they are required to keep that information in respect of all Account Holders for six years from the reporting period in which it is identified and to report it to HMRC to the extent that it is reportable under one of the agreements.

There are four categories of financial institution common to each of the agreements –

  • Custodial Institution
  • Depository Institution
  • Investment Entity, and
  • Specified Insurance Company

Each category of financial institution is determined by set criteria. Where an entity does not meet the definition of financial institution in any of the categories, then it will be classified as a non-financial entity (NFE) or, for FATCA purposes, a non-financial foreign entity (NFFE). Throughout this guidance references to NFE should be read as including a reference to NFFE unless otherwise specified.