102500 – Due Diligence: General Requirements

Due diligence requirements apply for ‘new’ accounts and ‘pre-existing’ accounts.

The Regulations for all the automatic exchange of information of financial account regimes require financial institutions to identify, maintain and report information on the tax residence of Account Holders, and whether they are US citizens, irrespective of whether or not they are tax resident in a Reportable Jurisdiction. This referred to as the ‘wider approach’. Financial institutions are required to carry out due diligence procedures on financial accounts that they hold in order to establish if the person holding the account is tax resident in a jurisdiction with which the UK has agreed to automatically exchange information. For automatic exchange with the USA under FATCA, the financial institution must establish whether the person is tax resident in the USA or, for individuals, is a citizen of the USA irrespective of where they are resident.

If the Account Holder is identified as being tax resident in any of the jurisdictions with which the UK has agreed to exchange information on a reciprocal basis, then they are a Reportable Person and the account is a Reportable Account.

An account is treated as a Reportable Account as of the date it is identified as such under the due diligence procedures that financial institutions must follow. The requirement to apply due diligence procedures for pre-existing accounts is subject to certain options that financial institutions may elect to apply such that accounts below de minimis thresholds are not subject to review.