Due diligence requirement (reporting financial institutions)

This is an overview of a very long procedural rule; the bare Rules carry the detailed tests and look-back periods.

When an account becomes reportable (sub-rule 1). From the date it is identified as reportable under the due diligence procedures; information is reported annually in the calendar year after the year to which it relates.

Definitions (sub-rule 2). "Documentary evidence" includes a certificate of residence from an authorised Government body, valid government-issued identification for an individual, official documentation of an entity showing its name and either its principal office address or its country of incorporation, and certain financial statements, credit reports, bankruptcy filings or securities regulator reports. A "high value account" is a pre-existing individual account whose balance or value exceeds an amount equivalent to one million U.S. dollars on the relevant date; a "lower value account" is a pre-existing individual account at or below that for other reportable accounts (and above fifty thousand U.S. dollars up to one million for U.S. reportable accounts). "Pre-existing" and "new" accounts are distinguished by dates — 30 June 2014 and 1 July 2014 for U.S. reportable accounts, and 31 December 2015 and 1 January 2016 for other reportable accounts, with 31 December 2025 and 1 January 2026 where an account is a financial account solely because of the amendments to the Common Reporting Standard.

Pre-existing individual accounts (sub-rule 3). Certain small accounts and certain insurance or annuity contracts that cannot lawfully be sold to non-residents need not be reviewed. For lower value accounts, the institution searches electronically searchable data for indicia of foreign tax residence — a foreign tax residence or an unambiguous U.S. place of birth, a current foreign mailing or residence address, foreign telephone numbers and no Indian number, standing instructions to transfer funds to an account in a foreign country, a power of attorney or signatory authority to a person with a foreign address, or a "hold mail" or "in-care-of" foreign address with no other address — and, if indicia are found, treats the account as reportable unless it obtains a self-certification or documentary evidence. High value accounts get an enhanced review of electronic records and paper files and a relationship manager inquiry. The rule then deals with pre-existing entity accounts and new individual and new entity accounts, which require a self-certification and a check of its reasonableness against information obtained, including documentation collected under anti-money laundering and know-your-customer procedures.