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Indian Banks To Soon Freeze Accounts For FATCA Non-Compliance

by Mary Swire,, Hong Kong
Thursday, April 20, 2017

The Indian Ministry of Finance on April 11 warned that where Foreign Account Tax Compliance Act-related self-certification and due diligence in relation to financial accounts have not taken place by April 30, 2017, affected accounts may be frozen until such time as these checks have taken place.

Under the Inter-Governmental Agreement with the United States on the implementation of FATCA, financial institutions were directed to obtain self-certification concerning ownership from account holders and relevant documentation (relating to all accounts opened between July 1, 2014 and August 31, 2015), and to close accounts for which the required information was not forthcoming.

However, the Ministry explained that: "In view of the difficulties highlighted by stakeholders in following the provision for 'closure' of financial accounts, [an August 31, 2016, press release said] that the financial institutions may not close the accounts by August 31, 2016, in respect of which self-certifications have not been obtained under the alternative procedure, and a revised timeline shall be notified in due course. The financial institutions were also advised to continue to work on completing the required due diligence, including obtaining self-certifications."

It went on to add that, in response to queries from accountholders, "the account holders may be informed that, in case self-certifications are not provided till April 30, 2017, the accounts would be blocked, which would mean that the financial institution would prohibit the account holder from effecting any transaction with respect to such accounts. The transactions by the account holder in such blocked accounts may, thereafter, be permitted once the self-certification is obtained and due diligence completed."

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