HSBC Requests Treasury Relief from FATCA EAG Rule

HSBC asked the Treasury and the IRS to provide permanent or at least transitory relief from a rule that could prevent certain HSBC entities from being compliant with FATCA as of July 1, 2014. Under the Final FATCA Regulations, Foreign Financial Institutions ("FFIs") in non-IGA countries may only be compliant under FATCA if all members of their Expanded Affiliated Group are compliant under FATCA. According to HSBC, some of its affiliates or branches are located in countries that have not yet signed an Intergovernmental Agreement ("IGA") with the United States or reached substantial agreement as to the terms of such an IGA. In addition, in certain of these countries, FFIs are being told by local regulators that they are not permitted to register with the IRS under FATCA prior to an IGA's being agreed to in these countries. In other cases, according to HSBC, the legal position and attitude of local regulators toward FATCA registration is uncertain. HSBC is concerned that if FFIs in such jurisdictions are not registered by July 1, its otherwise compliant affiliates will lose their FATCA-compliant status. In order to avoid having a disproportionate impact on otherwise compliant EAG members, HSBC has proposed that the Treasury and the IRS, at least on a transitional basis, waive the EAG rule with respect to affiliates that are not permitted to register as a result of factors outside their control.

See: HSBC Letter.See also: Cabinet FATCA Materials (for Cabinet subscribers only).For more information, please contact Daniel Mulcahy and Mark Howe.