IEIM400610 - Financial Institutions: Introduction

Financial Institutions

The UK regulations for automatic exchange of financial account information impose obligations on UK Financial Institutions to collect and maintain information about the residence, and in the case of the USA the citizenship as well, of individuals and entities for whom they maintain financial accounts. Under the ‘wider approach’ [see IEIM400140] they are required to keep that information in respect of all Account Holders for a period of 5 years and to report it to HMRC to the extent that it is reportable under one of the agreements.

There are four categories of Financial Institution common to both the FATCA and CRS agreements –

• Custodial Institution [see IEIM400640]
• Depository Institution [see IEIM400740]
• Investment Entity [IEIM400760], and
• Specified Insurance Company [IEIM400840]

Under the US FATCA Regulations, other definitions of Financial Institution exist but these are not Reporting Financial Institutions for FATCA purposes [see IEIM400630].

Each category of Financial Institution is determined by set criteria. Where an entity does not meet the definition of financial institution in any of the categories then it will be classified as Non-Financial Entity (NFE) [see IEIM404040] or, for FATCA purposes, a Non-Financial Foreign Entity (NFFE). Throughout this guidance references to NFE should be read as including a reference to NFFE unless otherwise specified.

Where an entity falls within the definition of one of the above categories the Financial Institution will be classified either as a Reporting Financial Institution or a Non-Reporting Financial Institution (NRFI). The definition of NRFI varies between the regimes such that a NRFI for FATCA may be a Reporting Financial Institution for the CRS. The definitions of NRFI for each regime can be found at [see IEIM400920] onwards.