The Agreement sets out that Financial Institutions are responsible for the identification and reporting of Financial Accounts held by Specified US Persons.
A Financial Institution can rely on a third party service provider to fulfil its obligations under the legislation, but the obligations remain the responsibility of the Financial Institution and so any failure will be seen as a failure on the part of the Financial Institution.
A fund may use a transfer agent, or other person such as a FA to fulfil its due diligence requirements or a company may use a business process outsourcing provider to fulfil its due diligence requirements. However, in the event of any irregularities or failure to meet the legislative requirements the Financial Institution, in this case, the fund, will be held accountable.
A Financial Institution will need to follow one or more of the following three processes for identification of account holders: