04.16 – Currency Conversion

Where accounts are denominated in a currency other than US dollars, then the threshold limits must be converted into the currency in which the accounts are denominated before determining if they apply.

This should be done using a published spot rate for the 31 December of the year being reported or in the case of an insurance contract or annuity contract, the date of the most recent contract valuation.

In the case of closed accounts, the spot rate to be used is the rate on the date the account was closed.

Example 1

The threshold to be applied to GBP denominated Pre-existing Individual Depository Accounts when a published spot rate at 31 December 2014 is 1.6500 would be £30,303. ($50,000/1.6500)

Example 2

A Pre-existing Insurance Contract is valued at £155,000 as of 31 May 2014. To be measured against the $250,000 threshold, the Financial Institution can use the spot rate at 31 May 2014.

Alternatively a Financial Institution could convert non-US dollar balances into US dollars and then apply the thresholds. Regardless of the method of conversion, the rules for determining the spot rate apply.

The method of conversion must be applied consistently.

Examples of acceptable published exchange rates include Reuters, Bloomberg, Financial Times and exchange rates published on the HMRC website. (www.hmrc.gov.uk)