07.07 – Identification of an entity as a Non-Financial Foreign Entity (NFFE)

When an entity account holder is not identified as either a US Person or a Financial Institution, the Financial Institution must consider whether the entity is a Passive NFFE and if any of the Controlling Persons of that entity are a US citizen or tax resident of the US.

An entity will be a Passive NFFE if it is not an Active NFFE (See Section 2.6). To determine whether the entity is a Passive NFFE, the Financial Institution must obtain a self certification from the account holder establishing its status; unless it has information in its possession or that is publicly available that enables the Financial Institution to reasonably determine whether or not the entity is an Active NFFE.

To identify the Controlling Persons of an entity, a Financial Institution may rely on information collected and maintained under AML/KYC procedures.

To determine whether the Controlling Persons of a Passive NFFE are citizens or residents of the US for tax purposes, Financial Institutions may rely on:

  • Information collected and maintained under AML/KYC procedures in the case of an account held by one or more Passive NFFEs, with a balance that does not exceed $1,000,000.
  • A self certification from an account holder or Controlling Person in the case of an account held by one or more Passive NFFEs, with a balance that exceeds $1,000,000.