|Financial institutions must determine whether a New Entity Account Holder is a Passive NFE with one or more Controlling Persons who are Reportable Persons. If so, then the account must be treated as a Reportable Account. In making this determination, the financial institution must follow the guidance below but may do so in the order most appropriate under the circumstances.
Determining whether the Account Holder is a Passive NFE
A financial institution may obtain a self-certification from the Account Holder to establish its status, or instead may use:
Note though that a professionally managed investment entity resident in a non-Participating Jurisdiction is always treated as a Passive NFE, notwithstanding that it would be treated as a financial institution if it were resident in a Participating Jurisdiction (this ensures that it is not possible for Controlling Persons to avoid reporting by setting up such entities in non-Participating Jurisdictions).
Determining Controlling Persons
For the purposes of determining the Controlling Persons of an Account Holder, a financial institution may rely on information collected and maintained under AML/KYC Procedures.
Determining whether a Controlling Person is a Reportable Person
For determining whether a Controlling Person of a Passive NFE is a Reportable Person, a financial institution may only rely on a self-certification from either the entity Account Holder or the Controlling Person.
This can be summarised in the following diagram (© OECD).