04.10 – Self Certification for New Individual Accounts

The requirements for self certification for New Individual Accounts are focused on establishing the tax residency or residencies of the account holder, and for the specific purposes of the Agreement whether or not the account holder is a US citizen.

Obtaining a self certification

Unless the Financial Account is of a type that does not need to be reviewed, identified or reported, a Financial Institution is required to obtain a self certification to enable it to determine where the account holder is tax resident and whether or not they are a US citizen. The self certification process and documentation should allow for cases where the account holder is a tax resident of more than one country.

Citizenship is important when considering the Agreement as a US citizen is considered a US resident for tax purposes even if they are also tax resident elsewhere.

For the Agreement, where a self certification determines that a New Individual Account holder is a US resident for tax purposes, there is also a requirement to obtain a US Taxpayer Identification Number (TIN) from the account holder. (See Section 4.17)

Where a self certification is already held

If the individual already holds a self-certification for the account holder, for instance, if one has been obtained for another Financial Account, then provided the Financial Institution can access this document (see Section 4.8) they will be held to have ‘obtained’ this document. However, if there has been a Change in Circumstance since this self certification was obtained (see Section 4.18), or any of the information obtained when the New account is opened indicates that the previous self-certification can no longer be relied upon, then a new self certification must be obtained.

Timing of a self certification

It is expected that a self-certification will be requested as part of the account opening procedure for new customers. It is not mandatory that the self certification must be obtained before the account can be opened. However, the Financial Institution should request and obtain the self certification within a reasonable period (90 days or a reasonable length of time determined by the circumstances).

If for some reason the Financial Institution is unable to obtain a valid self-certification on opening of the account by the time that the account would need to be reported (e.g. an assignment of an insurance contract where the Financial Institution is unable to refuse the account even though no self-certification is provided, the self certification provided cannot be relied upon, or the account holder has simply not yet replied) then the account should be treated as reportable from the date it is opened. As the account is reportable if a self certification has not been obtained, reporting it is compliant with data protection law. However, if the Financial Institution subsequently receives a self certification that shows the account was NOT reportable they are entitled to make a ‘correction’ to their report.

Note: This is different treatment to the reporting of a pre-existing account where if indicia are found the account is not treated as reportable until 90 days after the account holder has been asked for a self certification.

Wording of self certification

A Financial Institution can choose the form of wording it uses to determine the tax residence of a New Individual Account holder. However, the wording must be sufficient for an account holder to confirm the country or countries where they are tax resident and if they are a US citizen.

Format of the self certification

Financial Institutions may permit individuals to open accounts in various ways. For example, individuals can make investments or purchase financial products by telephone, online or on paper application forms. They may even invest without using any of the Financial Institution’s set application processes and instead send a payment with a covering letter (which is then followed up with required documentation). The method of self certification does not necessarily have to follow the existing account opening or application method.

Self certifications can be obtained in any of these account opening procedures. The following examples are intended to illustrate how these may operate but are not exhaustive.

Example 1 Telephone Applications

An individual makes a telephone call to a Financial Institution, asking to open an account in line with the Financial Institution’s normal account opening procedures.

The Financial Institution asks the account holder to state the countries in which they are tax resident and whether they are a US citizen. The individual provides this information on the phone, and the Financial Institution records the confirmation on its system. Subsequent paperwork sent to the investor to confirm the account opening should include their response to these self certification questions and require them to contact the Financial Institution in the event that it is not correct.

Example 2 Online Applications

An individual accesses the website of a Financial Institution to open an account in line with the Financial Institution’s normal account opening procedures. On the account opening web page, along with information about the individual such as name and address, the individual is asked to select the appropriate country or countries in which they are tax resident and whether they are a US citizen.