AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA
AND THE GOVERNMENT OF MALAYSIA TO IMPROVE INTERNATIONAL TAX
COMPLIANCE AND TO IMPLEMENT THE FOREIGN ACCOUNT TAX COMPLIANCE ACT
Whereas, the Government of the United States of America and the Government of Malaysia
(each, a “Party,” and together, the “Parties”) desire to conclude an agreement to improve
international tax compliance;
Whereas, the United States of America enacted provisions commonly known as the
Foreign Account Tax Compliance Act (“FATCA”), which introduce a reporting regime for
financial institutions with respect to certain accounts;
Whereas, the Government of Malaysia is supportive of the underlying policy goal of FATCA
to improve tax compliance;
Whereas, FATCA has raised a number of issues, including that Malaysian financial
institutions may not be able to comply with certain aspects of FATCA due to domestic legal
impediments;
Whereas, an intergovernmental approach to FATCA implementation would address legal
impediments and reduce burdens for Malaysian financial institutions;
Whereas, the Parties desire to conclude an agreement to improve international tax
compliance and provide for the implementation of FATCA based on domestic reporting
and automatic exchange, subject to the confidentiality and other protections provided for
herein, including the provisions limiting the use of the information exchanged;
Now, therefore, the Parties have agreed as follows:
Article 1
Definitions
1. For purposes of this agreement and any annexes thereto (“Agreement”), the
following terms shall have the meanings set forth below:
a) The term “United States” means the United States of America, including the
States thereof, but does not include the U.S. Territories. Any reference to a
“State” of the United States includes the District of Columbia.
b) The term “U.S. Territory” means American Samoa, the Commonwealth of the
Northern Mariana Islands, Guam, the Commonwealth of Puerto Rico, or the U.S.
Virgin Islands.
c) The term “IRS” means the U.S. Internal Revenue Service.
d) The term “Malaysia” means the territories of the Federation of Malaysia, the
territorial sea of Malaysia, as well as the sea-bed and subsoil of the territorial
sea and the airspace above such areas and any area extending beyond the
limits of the territorial sea of Malaysia, and the sea-bed and subsoil of any such
area, which has been or may hereafter be designated under the laws of
Malaysia as an area over which Malaysia has sovereign rights and jurisdiction
for the purposes of exploring and exploiting the natural resources, whether
living or non-living, consistent with international law.
e) The term “Partner Jurisdiction” means a jurisdiction that has in effect an
agreement with the United States to facilitate the implementation of FATCA.
The IRS shall publish a list identifying all Partner Jurisdictions.
f) The term “Competent Authority” means:
(1) in the case of the United States, the Secretary of the Treasury or his
delegate; and
(2) in the case of Malaysia, the Minister of Finance or his authorized
representative.
g) The term “Financial Institution” means a Custodial Institution, a Depository
Institution, an Investment Entity, or a Specified Insurance Company.
h) The term “Custodial Institution” means any Entity that holds, as a substantial
portion of its business, financial assets for the account of others. An entity
holds financial assets for the account of others as a substantial portion of its
business if the entity’s gross income attributable to the holding of financial
assets and related financial services equals or exceeds 20 percent of the
entity’s gross income during the shorter of: (i) the three-year period that ends
on December 31 (or the final day of a non-calendar year accounting period)
prior to the year in which the determination is being made; or (ii) the period
during which the entity has been in existence.
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i) The term “Depository Institution” means any Entity that accepts deposits in
the ordinary course of a banking or similar business.
j) The term “Investment Entity” means any Entity that conducts as a business
(or is managed by an entity that conducts as a business) one or more of the
following activities or operations for or on behalf of a customer:
(1) trading in money market instruments (cheques, bills, certificates of
deposit, derivatives, etc.); foreign exchange; exchange, interest rate and
index instruments; transferable securities; or commodity futures
trading;
(2) individual and collective portfolio management; or
(3) otherwise investing, administering, or managing funds or money on
behalf of other persons.
This subparagraph 1(j) shall be interpreted in a manner consistent with
similar language set forth in the definition of “financial institution” in the
Financial Action Task Force Recommendations.
k) The term “Specified Insurance Company” means any Entity that is an
insurance company (or the holding company of an insurance company) that
issues, or is obligated to make payments with respect to, a Cash Value
Insurance Contract or an Annuity Contract.
l) The term “Malaysian Financial Institution” means (i) any Financial
Institution resident in Malaysia, but excluding any branch of such Financial
Institution that is located outside Malaysia, and (ii) any branch of a Financial
Institution not resident in Malaysia, if such branch is located in Malaysia.
m) The term “Partner Jurisdiction Financial Institution” means (i) any
Financial Institution established in a Partner Jurisdiction, but excluding any
branch of such Financial Institution that is located outside the Partner
Jurisdiction, and (ii) any branch of a Financial Institution not established in the
Partner Jurisdiction, if such branch is located in the Partner Jurisdiction.
n) The term “Reporting Malaysian Financial Institution” means any Malaysian
Financial Institution that is not a Non-Reporting Malaysian Financial
Institution.
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o)
p)
q)
The term “Non‐Reporting Malaysian Financial Institution” means any
Malaysian Financial Institution, or other Entity in Malaysia, that is described
in Annex II as a Non-Reporting Malaysian Financial Institution or that
otherwise qualifies as a deemed-compliant FFI or an exempt beneficial owner
under relevant U.S. Treasury Regulations.
The term “Non‐Participating Financial Institution” means a non-
participating FFI, as that term is defined in relevant U.S. Treasury Regulations,
but does not include a Malaysian Financial Institution or other Partner
Jurisdiction Financial Institution other than a Financial Institution treated as a
Non-Participating Financial Institution pursuant to subparagraph 3(b) of
Article 5 of this Agreement or the corresponding provision in an agreement
between the United States and a Partner Jurisdiction.
The term “Financial Account” means an account maintained by a Financial
Institution, and includes:
(1) in the case of an Entity that is a Financial Institution solely because it is
an Investment Entity, any equity or debt interest (other than interests
that are regularly traded on an established securities market) in the
Financial Institution;
(2) in the case of a Financial Institution not described in subparagraph
1(q)(1) of this Article, any equity or debt interest in the Financial
Institution (other than interests that are regularly traded on an
established securities market), if (i) the value of the debt or equity
interest is determined, directly or indirectly, primarily by reference to
assets that give rise to U.S. Source Withholdable Payments, and (ii) the
class of interests was established with a purpose of avoiding reporting in
accordance with this Agreement; and
(3) any Cash Value Insurance Contract and any Annuity Contract issued or
maintained by a Financial Institution, other than a non-investment-
linked, non-transferable immediate life annuity that is issued to an
individual and monetizes a pension or disability benefit provided under
an account that is excluded from the definition of Financial Account in
Annex II.
Notwithstanding the foregoing, the term “Financial Account” does not include
any account that is excluded from the definition of Financial Account in Annex
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II. For purposes of this Agreement, interests are “regularly traded” if there is a
meaningful volume of trading with respect to the interests on an ongoing basis,
and an “established securities market” means an exchange that is officially
recognized and supervised by a governmental authority in which the market
is located and that has a meaningful annual value of shares traded on the
exchange. For purposes of this subparagraph 1(q), an interest in a Financial
Institution is not “regularly traded” and shall be treated as a Financial Account
if the holder of the interest (other than a Financial Institution acting as an
intermediary) is registered on the books of such Financial Institution. The
preceding sentence will not apply to interests first registered on the books of
such Financial Institution prior to July 1, 2014, and with respect to interests
first registered on the books of such Financial Institution on or after July 1,
2014, a Financial Institution is not required to apply the preceding sentence
prior to January 1, 2016.
r) The term “Depository Account” includes any commercial, checking, savings,
time, or thrift account, or an account that is evidenced by a certificate of
deposit, thrift certificate, investment certificate, certificate of indebtedness, or
other similar instrument maintained by a Financial Institution in the ordinary
course of a banking or similar business. A Depository Account also includes an
amount held by an insurance company pursuant to a guaranteed investment
contract or similar agreement to pay or credit interest thereon.
s) The term “Custodial Account” means an account (other than an Insurance
Contract or Annuity Contract) for the benefit of another person that holds any
financial instrument or contract held for investment (including, but not limited
to, a share or stock in a corporation, a note, bond, debenture, or other evidence
of indebtedness, a currency or commodity transaction, a credit default swap, a
swap based upon a non-financial index, a notional principal contract, an
Insurance Contract or Annuity Contract, and any option or other derivative
instrument).
t) The term “Equity Interest” means, in the case of a partnership that is a
Financial Institution, either a capital or profits interest in the partnership. In
the case of a trust that is a Financial Institution, an Equity Interest is
considered to be held by any person treated as a settlor or beneficiary of all or
a portion of the trust, or any other natural person exercising ultimate effective
control over the trust. A Specified U.S. Person shall be treated as being a
beneficiary of a foreign trust if such Specified U.S. Person has the right to
receive directly or indirectly (for example, through a nominee) a mandatory
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distribution or may receive, directly or indirectly, a discretionary distribution
from the trust.
u) The term “Insurance Contract” means a contract (other than an Annuity
Contract) under which the issuer agrees to pay an amount upon the occurrence
of a specified contingency involving mortality, morbidity, accident, liability, or
property risk.
v) The term “Annuity Contract” means a contract under which the issuer agrees
to make payments for a period of time determined in whole or in part by
reference to the life expectancy of one or more individuals. The term also
includes a contract that is considered to be an Annuity Contract in accordance
with the law, regulation, or practice of the jurisdiction in which the contract
was issued, and under which the issuer agrees to make payments for a term of
years.
w) The term “Cash Value Insurance Contract” means an Insurance Contract
(other than an indemnity reinsurance contract between two insurance
companies) that has a Cash Value greater than $50,000.
x) The term “Cash Value” means the greater of (i) the amount that the
policyholder is entitled to receive upon surrender or termination of the
contract (determined without reduction for any surrender charge or policy
loan), and (ii) the amount the policyholder can borrow under or with regard
to the contract. Notwithstanding the foregoing, the term “Cash Value” does not
include an amount payable under an Insurance Contract as:
(1) a personal injury or sickness benefit or other benefit providing
indemnification of an economic loss incurred upon the occurrence of the
event insured against;
(2) a refund to the policyholder of a previously paid premium under an
Insurance Contract (other than under a life insurance contract) due to
policy cancellation or termination, decrease in risk exposure during the
effective period of the Insurance Contract, or arising from a
redetermination of the premium due to correction of posting or other
similar error; or
(3) a policyholder dividend based upon the underwriting experience of the
contract or group involved.
y) The term “U.S. Reportable Account” means a Financial Account maintained
by a Reporting Malaysian Financial Institution and held by one or more
Specified U.S. Persons or by a Non-U.S. Entity with one or more Controlling
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Persons that is a Specified U.S. Person. Notwithstanding the foregoing, an
account shall not be treated as a U.S. Reportable Account if such account is not
identified as a U.S. Reportable Account after application of the due diligence
procedures in Annex I.
z) The term “Account Holder” means the person listed or identified as the holder
of a Financial Account by the Financial Institution that maintains the account.
A person, other than a Financial Institution, holding a Financial Account for the
benefit or account of another person as agent, custodian, nominee, signatory,
investment advisor, or intermediary, is not treated as holding the account for
purposes of this Agreement, and such other person is treated as holding the
account. For purposes of the immediately preceding sentence, the term
“Financial Institution” does not include a Financial Institution organized or
incorporated in a U.S. Territory. In the case of a Cash Value Insurance Contract
or an Annuity Contract, the Account Holder is any person entitled to access the
Cash Value or change the beneficiary of the contract. If no person can access
the Cash Value or change the beneficiary, the Account Holder is any person
named as the owner in the contract and any person with a vested entitlement
to payment under the terms of the contract. Upon the maturity of a Cash Value
Insurance Contract or an Annuity Contract, each person entitled to receive a
payment under the contract is treated as an Account Holder.
aa) The term “U.S. Person” means a U.S. citizen or resident individual, a
partnership or corporation organized in the United States or under the laws of
the United States or any State thereof, a trust if (i) a court within the United
States would have authority under applicable law to render orders or
judgments concerning substantially all issues regarding administration of the
trust, and (ii) one or more U.S. persons have the authority to control all
substantial decisions of the trust, or an estate of a decedent that is a citizen or
resident of the United States. This subparagraph 1(aa) shall be interpreted in
accordance with the U.S. Internal Revenue Code.
bb) The term “Specified U.S. Person” means a U.S. Person, other than: (i) a
corporation the stock of which is regularly traded on one or more established
securities markets; (ii) any corporation that is a member of the same expanded
affiliated group, as defined in section 1471(e)(2) of the U.S. Internal Revenue
Code, as a corporation described in clause (i); (iii) the United States or any
wholly owned agency or instrumentality thereof; (iv) any State of the United
States, any U.S. Territory, any political subdivision of any of the foregoing, or
any wholly owned agency or instrumentality of any one or more of the
foregoing; (v) any organization exempt from taxation under section 501(a) of
the U.S. Internal Revenue Code or an individual retirement plan as defined in
section 7701(a)(37) of the U.S. Internal Revenue Code; (vi) any bank as defined
in section 581 of the U.S. Internal Revenue Code; (vii) any real estate
investment trust as defined in section 856 of the U.S. Internal Revenue Code;
(viii) any regulated investment company as defined in section 851 of the U.S.
Internal Revenue Code or any entity registered with the U.S. Securities and
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Exchange Commission under the Investment Company Act of 1940 (15 U.S.C.
80a-64); (ix) any common trust fund as defined in section 584(a) of the U.S.
Internal Revenue Code; (x) any trust that is exempt from tax under section
664(c) of the U.S. Internal Revenue Code or that is described in section
4947(a)(1) of the U.S. Internal Revenue Code; (xi) a dealer in securities,
commodities, or derivative financial instruments (including notional principal
contracts, futures, forwards, and options) that is registered as such under the
laws of the United States or any State; (xii) a broker as defined in section
6045(c) of the U.S. Internal Revenue Code; or (xiii) any tax-exempt trust under
a plan that is described in section 403(b) or section 457(g) of the U.S. Internal
Revenue Code.
cc) The term “Entity” means a legal person or a legal arrangement such as a trust.
dd) The term “Non‐U.S. Entity” means an Entity that is not a U.S. Person.
ee) The term “U.S. Source Withholdable Payment” means any payment of
interest (including any original issue discount), dividends, rents, salaries,
wages, premiums, annuities, compensations, remunerations, emoluments, and
other fixed or determinable annual or periodical gains, profits, and income, if
such payment is from sources within the United States. Notwithstanding the
foregoing, a U.S. Source Withholdable Payment does not include any payment
that is not treated as a withholdable payment in relevant U.S. Treasury
Regulations.
ff) An Entity is a “Related Entity” of another Entity if either Entity controls the
other Entity, or the two Entities are under common control. For this purpose
control includes direct or indirect ownership of more than 50 percent of the
vote or value in an Entity. Notwithstanding the foregoing, Malaysia may treat
an Entity as not a Related Entity of another Entity if the two Entities are not
members of the same expanded affiliated group as defined in section
1471(e)(2) of the U.S. Internal Revenue Code.
gg) The term “U.S. TIN” means a U.S. federal taxpayer identifying number.
hh) The term “Controlling Persons” means the natural persons who exercise
control over an Entity. In the case of a trust, such term means the settlor, the
trustees, the protector (if any), the beneficiaries or class of beneficiaries, and
any other natural person exercising ultimate effective control over the trust,
and in the case of a legal arrangement other than a trust, such term means
persons in equivalent or similar positions. The term “Controlling Persons”
shall be interpreted in a manner consistent with the Financial Action Task
Force Recommendations.
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2. Any term not otherwise defined in this Agreement shall, unless the context
otherwise requires or the Competent Authorities agree to a common meaning (as
permitted by domestic law), have the meaning that it has at that time under the law of the
Party applying this Agreement, any meaning under the applicable tax laws of that Party
prevailing over a meaning given to the term under other laws of that Party.
Article 2
Obligations to Obtain and Exchange Information with Respect to U.S. Reportable
Accounts
1. Subject to the provisions of Article 3 of this Agreement, Malaysia shall obtain the
information specified in paragraph 2 of this Article with respect to all U.S. Reportable
Accounts and shall annually exchange this information with the United States on an
automatic basis.
2. The information to be obtained and exchanged with respect to each U.S. Reportable
Account of each Reporting Malaysian Financial Institution is:
a) the name, address, and U.S. TIN of each Specified U.S. Person that is an Account
Holder of such account and, in the case of a Non-U.S. Entity that, after
application of the due diligence procedures set forth in Annex I, is identified as
having one or more Controlling Persons that is a Specified U.S. Person, the
name, address, and U.S. TIN (if any) of such entity and each such Specified U.S.
Person;
b) the account number (or functional equivalent in the absence of an account
number);
c) the name and identifying number of the Reporting Malaysian Financial
Institution;
d) the account balance or value (including, in the case of a Cash Value Insurance
Contract or Annuity Contract, the Cash Value or surrender value) as of the end
of the relevant calendar year or other appropriate reporting period or, if the
account was closed during such year, immediately before closure;
e) in the case of any Custodial Account:
(1) the total gross amount of interest, the total gross amount of dividends,
and the total gross amount of other income generated with respect to the
assets held in the account, in each case paid or credited to the account (or
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with respect to the account) during the calendar year or other
appropriate reporting period; and
(2) the total gross proceeds from the sale or redemption of property paid or
credited to the account during the calendar year or other appropriate
reporting period with respect to which the Reporting Malaysian
Financial Institution acted as a custodian, broker, nominee, or otherwise
as an agent for the Account Holder;
f) in the case of any Depository Account, the total gross amount of interest paid
or credited to the account during the calendar year or other appropriate
reporting period; and
g) in the case of any account not described in subparagraph 2(e) or 2(f) of this
Article, the total gross amount paid or credited to the Account Holder with
respect to the account during the calendar year or other appropriate reporting
period with respect to which the Reporting Malaysian Financial Institution is
the obligor or debtor, including the aggregate amount of any redemption
payments made to the Account Holder during the calendar year or other
appropriate reporting period.
Article 3
Time and Manner of Exchange of Information
1. For purposes of the exchange obligation in Article 2 of this Agreement, the amount
and characterization of payments made with respect to a U.S. Reportable Account may be
determined in accordance with the principles of the tax laws of Malaysia.
2. For purposes of the exchange obligation in Article 2 of this Agreement, the
information exchanged shall identify the currency in which each relevant amount is
denominated.
3. With respect to paragraph 2 of Article 2 of this Agreement, information is to be
obtained and exchanged with respect to 2014 and all subsequent years, except that:
a) the information to be obtained and exchanged with respect to 2014 is only the
information described in subparagraphs 2(a) through 2(d) of Article 2 of this
Agreement;
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b) the information to be obtained and exchanged with respect to 2015 is the
information described in subparagraphs 2(a) through 2(g) of Article 2 of this
Agreement, except for gross proceeds described in subparagraph 2(e)(2) of
Article 2 of this Agreement; and
c) the information to be obtained and exchanged with respect to 2016 and
subsequent years is the information described in subparagraphs 2(a) through
2(g) of Article 2 of this Agreement;
4. Notwithstanding paragraph 3 of this Article, with respect to each U.S. Reportable
Account maintained by a Reporting Malaysian Financial Institution as of June 30, 2014,
and subject to paragraph 2 of Article 6 of this Agreement, Malaysia is not required to
obtain and include in the exchanged information the U.S. TIN of any relevant person if
such U.S. TIN is not in the records of the Reporting Malaysian Financial Institution. In such
a case, Malaysia shall obtain and include in the exchanged information the date of birth of
the relevant person, if the Reporting Malaysian Financial Institution has such date of birth
in its records.
5. Subject to paragraphs 3 and 4 of this Article, the information described in Article 2
of this Agreement shall be exchanged by the later of nine months after the end of the
calendar year to which the information relates or the next September 30th after the
Agreement enters into force.
6. The Competent Authorities of Malaysia and the United States shall enter into an
agreement or arrangement under the mutual agreement procedure provided for in Article
8 of this Agreement, which shall:
a) establish the procedures for the automatic exchange obligations described in
Article 2 of this Agreement;
b) prescribe rules and procedures as may be necessary to implement Article 5 of
this Agreement; and
c) establish as necessary procedures for the exchange of the information
reported under subparagraph 1(b) of Article 4 of this Agreement.
7. All information exchanged shall be subject to the confidentiality and other
protections provided for in Article 9 of this Agreement, including the provisions limiting
the use of the information exchanged.
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Article 4
Application of FATCA to Malaysian Financial Institutions
1. Treatment of Reporting Malaysian Financial Institutions. Each Reporting
Malaysian Financial Institution shall be treated as complying with, and not subject to
withholding under, section 1471 of the U.S. Internal Revenue Code if Malaysia complies
with its obligations under Articles 2 and 3 of this Agreement with respect to such
Reporting Malaysian Financial Institution, and the Reporting Malaysian Financial
Institution:
a) identifies U.S. Reportable Accounts and reports annually to the Malaysian
Competent Authority the information required to be reported in paragraph 2
of Article 2 of this Agreement in the time and manner described in Article 3 of
this Agreement;
b) for each of 2015 and 2016, reports annually to the Malaysian Competent
Authority the name of each Non-Participating Financial Institution to which it
has made payments and the aggregate amount of such payments;
c) complies with the applicable registration requirements on the IRS FATCA
registration website;
d) to the extent that a Reporting Malaysian Financial Institution is (i) acting as a
qualified intermediary (for purposes of section 1441 of the U.S. Internal
Revenue Code) that has elected to assume primary withholding responsibility
under chapter 3 of subtitle A of the U.S. Internal Revenue Code, (ii) a foreign
partnership that has elected to act as a withholding foreign partnership (for
purposes of both sections 1441 and 1471 of the U.S. Internal Revenue Code),
or (iii) a foreign trust that has elected to act as a withholding foreign trust (for
purposes of both sections 1441 and 1471 of the U.S. Internal Revenue Code),
withholds 30 percent of any U.S. Source Withholdable Payment to any Non-
Participating Financial Institution; and
e) in the case of a Reporting Malaysian Financial Institution that is not described
in subparagraph 1(d) of this Article and that makes a payment of, or acts as an
intermediary with respect to, a U.S. Source Withholdable Payment to any Non-
Participating Financial Institution, the Reporting Malaysian Financial
Institution provides to any immediate payor of such U.S. Source Withholdable
Payment the information required for withholding and reporting to occur with
respect to such payment.
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Notwithstanding the foregoing, a Reporting Malaysian Financial Institution with respect
to which the conditions of this paragraph 1 are not satisfied shall not be subject to
withholding under section 1471 of the U.S. Internal Revenue Code unless such Reporting
Malaysian Financial Institution is treated by the IRS as a Non-Participating Financial
Institution pursuant to subparagraph 3(b) of Article 5 of this Agreement.
2. Suspension of Rules Relating to Recalcitrant Accounts. The United States shall
not require a Reporting Malaysian Financial Institution to withhold tax under section
1471 or 1472 of the U.S. Internal Revenue Code with respect to an account held by a
recalcitrant account holder (as defined in section 1471(d)(6) of the U.S. Internal Revenue
Code), or to close such account, if the U.S. Competent Authority receives the information
set forth in paragraph 2 of Article 2 of this Agreement, subject to the provisions of Article
3 of this Agreement, with respect to such account.
3. Specific Treatment of Malaysian Retirement Plans. The United States shall
treat as deemed-compliant FFIs or exempt beneficial owners, as appropriate, for purposes
of sections 1471 and 1472 of the U.S. Internal Revenue Code, Malaysian retirement plans
described in Annex II. For this purpose, a Malaysian retirement plan includes an Entity
established or located in, and regulated by, Malaysia, or a predetermined contractual or
legal arrangement, operated to provide pension or retirement benefits or earn income for
providing such benefits under the laws of Malaysia and regulated with respect to
contributions, distributions, reporting, sponsorship, and taxation.
4. Identification and Treatment of Other Deemed‐Compliant FFIs and Exempt
Beneficial Owners. The United States shall treat each Non-Reporting Malaysian
Financial Institution as a deemed-compliant FFI or as an exempt beneficial owner, as
appropriate, for purposes of section 1471 of the U.S. Internal Revenue Code.
5. Special Rules Regarding Related Entities and Branches That Are Non‐
Participating Financial Institutions. If a Malaysian Financial Institution, that otherwise
meets the requirements described in paragraph 1 of this Article or is described in
paragraph 3 or 4 of this Article, has a Related Entity or branch that operates in a
jurisdiction that prevents such Related Entity or branch from fulfilling the requirements
of a participating FFI or deemed-compliant FFI for purposes of section 1471 of the U.S.
Internal Revenue Code or has a Related Entity or branch that is treated as a Non-
Participating Financial Institution solely due to the expiration of the transitional rule for
limited FFIs and limited branches under relevant U.S. Treasury Regulations, such
Malaysian Financial Institution shall continue to be in compliance with the terms of this
Agreement and shall continue to be treated as a deemed-compliant FFI or exempt
beneficial owner, as appropriate, for purposes of section 1471 of the U.S. Internal Revenue
Code, provided that:
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a) the Malaysian Financial Institution treats each such Related Entity or branch
as a separate Non-Participating Financial Institution for purposes of all the
reporting and withholding requirements of this Agreement and each such
Related Entity or branch identifies itself to withholding agents as a Non-
Participating Financial Institution;
b) each such Related Entity or branch identifies its U.S. accounts and reports the
information with respect to those accounts as required under section 1471 of
the U.S. Internal Revenue Code to the extent permitted under the relevant laws
pertaining to the Related Entity or branch; and
c) such Related Entity or branch does not specifically solicit U.S. accounts held by
persons that are not resident in the jurisdiction where such Related Entity or
branch is located or accounts held by Non-Participating Financial Institutions
that are not established in the jurisdiction where such Related Entity or branch
is located, and such Related Entity or branch is not used by the Malaysian
Financial Institution or any other Related Entity to circumvent the obligations
under this Agreement or under section 1471 of the U.S. Internal Revenue Code,
as appropriate.
6. Coordination of Timing. Notwithstanding paragraphs 3 and 5 of Article 3 of this
Agreement:
a) Malaysia shall not be obligated to obtain and exchange information with
respect to a calendar year that is prior to the calendar year with respect to
which similar information is required to be reported to the IRS by participating
FFIs pursuant to relevant U.S. Treasury Regulations; and
b) Malaysia shall not be obligated to begin exchanging information prior to the
date by which participating FFIs are required to report similar information to
the IRS under relevant U.S. Treasury Regulations.
7. Coordination of Definitions with U.S. Treasury Regulations. Notwithstanding
Article 1 of this Agreement and the definitions provided in the Annexes to this Agreement,
in implementing this Agreement, Malaysia may use, and may permit Malaysian Financial
Institutions to use, a definition in relevant U.S. Treasury Regulations in lieu of a
corresponding definition in this Agreement, provided that such application would not
frustrate the purposes of this Agreement.
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Article 5
Collaboration on Compliance and Enforcement
1. General Inquiries. Subject to any further terms set forth in a competent authority
agreement concluded pursuant to paragraph 6 of Article 3 of this Agreement, the U.S.
Competent Authority may make follow-up requests to the Malaysian Competent
Authority, pursuant to which the Malaysian Competent Authority shall obtain and provide
additional information with respect to a U.S. Reportable Account, including the account
statements prepared in the ordinary course of a Reporting Malaysian Financial
Institution’s business that summarize the activity (including withdrawals, transfers, and
closures) of the U.S. Reportable Account.
2. Minor and Administrative Errors. The U.S. Competent Authority shall notify the
Malaysian Competent Authority when the U.S. Competent Authority has reason to believe
that administrative errors or other minor errors may have led to incorrect or incomplete
information reporting or resulted in other infringements of this Agreement. The
Malaysian Competent Authority shall apply its domestic law (including applicable
penalties) to obtain corrected and/or complete information or to resolve other
infringements of this Agreement.
3. Significant Non‐Compliance.
a) The U.S. Competent Authority shall notify the Malaysian Competent Authority
when the U.S. Competent Authority has determined that there is significant
non-compliance with the obligations under this Agreement with respect to a
Reporting Malaysian Financial Institution. The Malaysian Competent
Authority shall apply its domestic law (including applicable penalties) to
address the significant non-compliance described in the notice.
b) If such enforcement actions do not resolve the non-compliance within a period
of 18 months after notification of significant non-compliance is first provided
by the U.S. Competent Authority, the United States shall treat the Reporting
Malaysian Financial Institution as a Non-Participating Financial Institution
pursuant to this subparagraph 3(b).
4. Reliance on Third Party Service Providers. Malaysia may allow Reporting
Malaysian Financial Institutions to use third party service providers to fulfill the
obligations imposed on such Reporting Malaysian Financial Institutions by Malaysia, as
contemplated in this Agreement, but these obligations shall remain the responsibility of
the Reporting Malaysian Financial Institutions.
15
5. Prevention of Avoidance. Malaysia shall implement as necessary requirements
to prevent Financial Institutions from adopting practices intended to circumvent the
reporting required under this Agreement.
Article 6
Mutual Commitment to Continue to Enhance the Effectiveness of Information
Exchange and Transparency
1. Treatment of Passthru Payments and Gross Proceeds. The Parties are
committed to work together, along with Partner Jurisdictions, to develop a practical and
effective alternative approach to achieve the policy objectives of foreign passthru
payment and gross proceeds withholding that minimizes burden.
2. Documentation of Accounts Maintained as of June 30, 2014. With respect to
U.S. Reportable Accounts maintained by a Reporting Malaysian Financial Institution as of
June 30, 2014, Malaysia commits to establish, by January 1, 2017, for reporting with
respect to 2017 and subsequent years, rules requiring Reporting Malaysian Financial
Institutions to obtain the U.S. TIN of each Specified U.S. Person as required pursuant to
subparagraph 2(a) of Article 2 of this Agreement.
Article 7
Consistency in the Application of FATCA to Partner Ju risdictions
1. Malaysia shall be granted the benefit of any more favorable terms under Article 4
or Annex I of this Agreement relating to the application of FATCA to Malaysian Financial
Institutions afforded to another Partner Jurisdiction under a signed bilateral agreement
pursuant to which the other Partner Jurisdiction commits to undertake the same
obligations as Malaysia described in Articles 2 and 3 of this Agreement, and subject to the
same terms and conditions as described therein and in Articles 5, 6, 7, 10 and 11 of this
Agreement.
2. The United States shall notify Malaysia of any such more favorable terms, and such
more favorable terms shall apply automatically under this Agreement as if such terms
were specified in this Agreement and effective as of the date of signing of the agreement
incorporating the more favorable terms, unless Malaysia declines in writing the
application thereof.
16
Article 8
Mutual Agreement Procedure
1. Where difficulties or doubts arise between the Parties regarding the
implementation, application, or interpretation of this Agreement, the Competent
Authorities shall endeavor to resolve the matter by mutual agreement.
2. The Competent Authorities may adopt and implement procedures to facilitate the
implementation of this Agreement.
3. The Competent Authorities may communicate with each other directly for
purposes of reaching a mutual agreement under this Article.
Article 9
Confidentiality
1. The Malaysian Competent Authority shall treat any information received from the
United States pursuant to Article 5 of this Agreement as confidential and shall only
disclose such information as may be necessary to carry out its obligations under this
Agreement. Such information may be disclosed in connection with court proceedings
related to the performance of the obligations of Malaysia under this Agreement
2. Information provided to the U.S. Competent Authority pursuant Articles 2 and 5 of
this Agreement shall be treated as confidential and may be disclosed only to persons or
authorities (including courts and administrative bodies) of the Government of the United
States concerned with the assessment, collection, or administration of, the enforcement
or prosecution in respect of, or the determination of appeals in relation to, U.S. federal
taxes, or the oversight of such functions. Such persons or authorities shall use such
information only for such purposes. Such persons may disclose the information in public
court proceedings or in judicial decisions. The information may not be disclosed to any
other person, entity, authority, or jurisdiction. Notwithstanding the foregoing, where
Malaysia provides prior, written consent, the information may be used for purposes
permitted under the provisions of a mutual legal assistance treaty in force between the
Parties that allows for the exchange of tax information.
Article 10
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Consultations and Amendments
1. In case any difficulties in the implementation of this Agreement arise, either Party
may, independently of the mutual agreement procedure described in paragraph 1 of
Article 8 of this Agreement, request consultations to develop appropriate measures to
ensure the fulfillment of this Agreement.
2. This Agreement may be amended by written mutual agreement of the Parties.
Unless otherwise agreed upon, such an amendment shall enter into force through the same
procedures as set forth in paragraph 1 of Article 12 of this Agreement.
Article 11
Annexes
The Annexes form an integral part of this Agreement.
Article 12
Term of Agreement
1. This Agreement shall enter into force on the date of Malaysia’s written notification
to the United States that Malaysia has completed its necessary internal procedures
for entry into force of this Agreement.
2. Either Party may terminate this Agreement by giving notice of termination in
writing to the other Party. Such termination shall become effective on the first day
of the month following the expiration of a period of 12 months after the date of the
notice of termination.
3. The Parties shall, consult in good faith to amend this Agreement as necessary to
reflect progress on the commitments set forth in Article 6 of this Agreement.
4. If this Agreement is terminated, both Parties shall remain bound by the provisions of
Article 9 of this Agreement with respect to any information obtained under this
Agreement.
18
In witness whereof, the undersigned, being duly authorized thereto by their respective
Governments, have signed this Agreement.
Done at __________, in duplicate in the English language, this _____ day of ________, 20_____.
FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF
THE UNITED STATES OF AMERICA: MALAYSIA
19
ANNEX I
DUE DILIGENCE OBLIGATIONS FOR IDENTIFYING AND REPORTING ON U.S.
REPORTABLE ACCOUNTS AND ON PAYMENTS TO CERTAIN NON‐PARTICIPATING
FINANCIAL INSTITUTIONS
I. General.
A. Malaysia shall require that Reporting Malaysian Financial Institutions apply
the due diligence procedures contained in this Annex I to identify U.S. Reportable
Accounts and accounts held by Non-Participating Financial Institutions.
B. For purposes of the Agreement,
1. All dollar amounts are in U.S. dollars and shall be read to include the
equivalent in other currencies.
2. Except as otherwise provided herein, the balance or value of an
account shall be determined as of the last day of the calendar year or
other appropriate reporting period.
3. Where a balance or value threshold is to be determined as of June 30,
2014 under this Annex I, the relevant balance or value shall be
determined as of that day or the last day of the reporting period ending
immediately before June 30, 2014, and where a balance or value
threshold is to be determined as of the last day of a calendar year
under this Annex I, the relevant balance or value shall be determined
as of the last day of the calendar year or other appropriate reporting
period.
4. Subject to subparagraph E(1) of section II of this Annex I, an account
shall be treated as a U.S. Reportable Account beginning as of the date it
is identified as such pursuant to the due diligence procedures in this
Annex I.
5. Unless otherwise provided, information with respect to a U.S.
Reportable Account shall be reported annually in the calendar year
following the year to which the information relates.
C. As an alternative to the procedures described in each section of this Annex I,
Malaysia may permit Reporting Malaysian Financial Institutions to rely on the
procedures described in relevant U.S. Treasury Regulations to establish whether
an account is a U.S. Reportable Account or an account held by a Non-Participating
Financial Institution. Malaysia may permit Reporting Malaysian Financial
Institutions to make such election separately for each section of this Annex I
either with respect to all relevant Financial Accounts or, separately, with respect
to any clearly identified group of such accounts (such as by line of business or the
location of where the account is maintained).
II. Preexisting Individual Accounts The following rules and procedures apply for
purposes of identifying U.S. Reportable Accounts among Preexisting Accounts held by
individuals (“Preexisting Individual Accounts”).
A. Accounts Not Required to Be Reviewed, Identified, or Reported. Unless
the Reporting Malaysian Financial Institution elects otherwise, either with respect
to all Preexisting Individual Accounts or, separately, with respect to any clearly
identified group of such accounts, where the implementing rules in Malaysia
provide for such an election, the following Preexisting Individual Accounts are not
required to be reviewed, identified, or reported as U.S. Reportable Accounts:
1. Subject to subparagraph E(2) of this section, a Preexisting Individual
Account with a balance or value that does not exceed $50,000 as of
June 30, 2014.
2. Subject to subparagraph E(2) of this section, a Preexisting Individual
Account that is a Cash Value Insurance Contract or an Annuity Contract
with a balance or value of $250,000 or less as of June 30, 2014.
3. A Preexisting Individual Account that is a Cash Value Insurance
Contract or an Annuity Contract, provided the law or regulations of
Malaysia or the United States effectively prevent the sale of such a Cash
Value Insurance Contract or an Annuity Contract to U.S. residents (e.g.,
if the relevant Financial Institution does not have the required
registration under U.S. law, and the law of Malaysia requires reporting
or withholding with respect to insurance products held by residents of
Malaysia.
4. A Depository Account with a balance of $50,000 or less.
B. Review Procedures for Preexisting Individual Accounts With a Balance
or Value as of June 30, 2014, that Exceeds $50,000 ($250,000 for a Cash
Value Insurance Contract or Annuity Contract), But Does Not Exceed
$1,000,000 (“Lower Value Accounts”).
1. Electronic Record Search. The Reporting Malaysian Financial Institution
must review electronically searchable data maintained by the Reporting
Malaysian Financial Institution for any of the following U.S. indicia:
a) Identification of the Account Holder as a U.S. citizen or resident;
b) Unambiguous indication of a U.S. place of birth;
c) Current U.S. mailing or residence address (including a U.S. post office
box);
d) Current U.S. telephone number;
e) Standing instructions to transfer funds to an account maintained in the
United States;
f) Currently effective power of attorney or signatory authority granted to
a person with a U.S. address; or
g) An “in-care-of” or “hold mail” address that is the sole address the
Reporting Malaysian Financial Institution has on file for the Account
Holder. In the case of a Preexisting Individual Account that is a Lower
Value Account, an “in-care-of” address outside the United States or
“hold mail” address shall not be treated as U.S. indicia.
2. If none of the U.S. indicia listed in subparagraph B(1) of this section are
discovered in the electronic search, then no further action is required until there
is a change in circumstances that results in one or more U.S. indicia being
associated with the account, or the account becomes a High Value Account
described in paragraph D of this section.
3. If any of the U.S. indicia listed in subparagraph B(1) of this section are
discovered in the electronic search, or if there is a change in circumstances that
results in one or more U.S. indicia being associated with the account, then the
Reporting Malaysian Financial Institution must treat the account as a U.S.
Reportable Account unless it elects to apply subparagraph B(4) of this section and
one of the exceptions in such subparagraph applies with respect to that account.
4. Notwithstanding a finding of U.S. indicia under subparagraph B(1) of this
section, a Reporting Malaysian Financial Institution is not required to treat an
account as a U.S. Reportable Account if:
a) Where the Account Holder information unambiguously indicates a U.S.
place of birth, the Reporting Malaysian Financial Institution obtains,
or has previously reviewed and maintains a record of:
(1) A self-certification that the Account Holder is neither a U.S.
citizen nor a U.S. resident for tax purposes (which may be on an
IRS Form W-8 or other similar agreed form);
(2) A non-U.S. passport or other government-issued identification
evidencing the Account Holder’s citizenship or nationality in a
country other than the United States; and
(3) A copy of the Account Holder’s Certificate of Loss of Nationality
of the United States or a reasonable explanation of:
(a) The reason the Account Holder does not have such a
certificate despite relinquishing U.S. citizenship; or
(b) The reason the Account Holder did not obtain U.S.
citizenship at birth.
b) Where the Account Holder information contains a current U.S.
mailing or residence address, or one or more U.S. telephone
numbers that are the only telephone numbers associated with the
account, the Reporting Malaysian Financial Institution obtains, or has
previously reviewed and maintains a record of:
(1) A self-certification that the Account Holder is neither a U.S. citizen
nor a U.S. resident for tax purposes (which may be on an IRS Form
W-8 or other similar agreed form); and
(2) Documentary evidence, as defined in paragraph D of section VI of
this Annex I, establishing the Account Holder’s non-U.S. status.
c) Where the Account Holder information contains standing
instructions to transfer funds to an account maintained in the
United States, the Reporting Malaysian Financial Institution obtains,
or has previously reviewed and maintains a record of:
(1) A self-certification that the Account Holder is neither a U.S.
citizen nor a U.S. resident for tax purposes (which may be on an
IRS Form W-8 or other similar agreed form); and
(2) Documentary evidence, as defined in paragraph D of section VI of
this Annex I, establishing the Account Holder’s non-U.S. status.
d) Where the Account Holder information contains a currently effective
power of attorney or signatory authority granted to a person with
a U.S. address, has an “in‐care‐of” address or “hold mail” address
that is the sole address identified for the Account Holder, or has one
or more U.S. telephone numbers (if a non‐U.S. telephone number is
also associated with the account), the Reporting Malaysian Financial
Institution obtains, or has previously reviewed and maintains a record
of:
(1) A self-certification that the Account Holder is neither a U.S.
citizen nor a U.S. resident for tax purposes (which may be on an
IRS Form W-8 or other similar agreed form); or
(2) Documentary evidence, as defined in paragraph D of section VI of
this Annex I, establishing the Account Holder’s non-U.S. status.
C. Additional Procedures Applicable to Preexisting Individual Accounts That
Are Lower Value Accounts.
1. Review of Preexisting Individual Accounts that are Lower Value Accounts
for U.S. indicia must be completed by June 30, 2016.
2. If there is a change of circumstances with respect to a Preexisting Individual
Account that is a Lower Value Account that results in one or more U.S. indicia
described in subparagraph B(1) of this section being associated with the account,
then the Reporting Malaysian Financial Institution must treat the account as a U.S.
Reportable Account unless subparagraph B(4) of this section applies.
3. Except for Depository Accounts described in subparagraph A(4) of this
section, any Preexisting Individual Account that has been identified as a U.S.
Reportable Account under this section shall be treated as a U.S. Reportable
Account in all subsequent years, unless the Account Holder ceases to be a
Specified U.S. Person.
D. Enhanced Review Procedures for Preexisting Individual Accounts With a
Balance or Value That Exceeds $1,000,000 as of June 30, 2014, or December 31 of
2015 or Any Subsequent Year (“High Value Accounts”).
1. Electronic Record Search. The Reporting Malaysian Financial
Institution must review electronically searchable data maintained by the
Reporting Malaysian Financial Institution for any of the U.S. indicia described in
subparagraph B(1) of this section.
2. Paper Record Search. If the Reporting Malaysian Financial Institution’s
electronically searchable databases include fields for, and capture all of the
information described in, subparagraph D(3) of this section, then no further paper
record search is required. If the electronic databases do not capture all of this
information, then with respect to a High Value Account, the Reporting Malaysian
Financial Institution must also review the current customer master file and, to the
extent not contained in the current customer master file, the following documents
associated with the account and obtained by the Reporting Malaysian Financial
Institution within the last five years for any of the U.S. indicia described in
subparagraph B(1) of this section:
a) The most recent documentary evidence collected with respect to the
account;
b) The most recent account opening contract or documentation;
c) The most recent documentation obtained by the Reporting Malaysian
Financial Institution pursuant to AML/KYC Procedures or for other
regulatory purposes;
d) Any power of attorney or signature authority forms currently in effect;
and
e) Any standing instructions to transfer funds currently in effect.
3. Exception Where Databases Contain Sufficient Information. A Reporting
Malaysian Financial Institution is not required to perform the paper record search
described in subparagraph D(2) of this section if the Reporting Malaysian
Financial Institution’s electronically searchable information includes the
following:
a) The Account Holder’s nationality or residence status;
b) The Account Holder’s residence address and mailing address currently
on file with the Reporting Malaysian Financial Institution;
c) The Account Holder’s telephone number(s) currently on file, if any, with
the Reporting Malaysian Financial Institution;
d) Whether there are standing instructions to transfer funds in the
account to another account (including an account at another branch of
the Reporting Malaysian Financial Institution or another Financial
Institution);
e) Whether there is a current “in-care-of” address or “hold mail” address
for the Account Holder; and
f) Whether there is any power of attorney or signatory authority for the
account.
4. Relationship Manager Inquiry for Actual Knowledge. In addition to the
electronic and paper record searches described above, the Reporting Malaysian
Financial Institution must treat as a U.S. Reportable Account any High Value
Account assigned to a relationship manager (including any Financial Accounts
aggregated with such High Value Account) if the relationship manager has actual
knowledge that the Account Holder is a Specified U.S. Person.
5. Effect of Finding U.S. Indicia.
a) If none of the U.S. indicia listed in subparagraph B(1) of this section are
discovered in the enhanced review of High Value Accounts described
above, and the account is not identified as held by a Specified U.S.
Person in subparagraph D(4) of this section, then no further action is
required until there is a change in circumstances that results in one or
more U.S. indicia being associated with the account.
b) If any of the U.S. indicia listed in subparagraph B(1) of this section are
discovered in the enhanced review of High Value Accounts described
above, or if there is a subsequent change in circumstances that results
in one or more U.S. indicia being associated with the account, then the
Reporting Malaysian Financial Institution must treat the account as a
U.S. Reportable Account unless it elects to apply subparagraph B(4) of
this section and one of the exceptions in such subparagraph applies
with respect to that account.
c) Except for Depository Accounts described in subparagraph A(4) of this
section, any Preexisting Individual Account that has been identified as
a U.S. Reportable Account under this section shall be treated as a U.S.
Reportable Account in all subsequent years, unless the Account Holder
ceases to be a Specified U.S. Person.
E. Additional Procedures Applicable to High Value Accounts.
1. If a Preexisting Individual Account is a High Value Account as of June
30, 2014, the Reporting Malaysian Financial Institution must complete
the enhanced review procedures described in paragraph D of this
section with respect to such account by June 30, 2015. If based on this
review such account is identified as a U.S. Reportable Account on or
before December 31, 2014, the Reporting Malaysian Financial
Institution must report the required information about such account
with respect to 2014 in the first report on the account and on an
annual basis thereafter. In the case of an account identified as a U.S.
Reportable Account after December 31, 2014 and on or before June 30,
2015, the Reporting Malaysian Financial Institution is not required to
report information about such account with respect to 2014, but must
report information about the account on an annual basis thereafter.
2. If a Preexisting Individual Account is not a High Value Account as of
June 30, 2014, but becomes a High Value Account as of the last day of
2015 or any subsequent calendar year, the Reporting Malaysian
Financial Institution must complete the enhanced review procedures
described in paragraph D of this section with respect to such account
within six months after the last day of the calendar year in which the
account becomes a High Value Account. If based on this review such
account is identified as a U.S. Reportable Account, the Reporting
Malaysian Financial Institution must report the required information
about such account with respect to the year in which it is identified as
a U.S. Reportable Account and subsequent years on an annual basis,
unless the Account Holder ceases to be a Specified U.S. Person.
3. Once a Reporting Malaysian Financial Institution applies the enhanced
review procedures described in paragraph D of this section to a High
Value Account, the Reporting Malaysian Financial Institution is not
required to re-apply such procedures, other than the relationship
manager inquiry described in subparagraph D(4) of this section, to the
same High Value Account in any subsequent year.
4. If there is a change of circumstances with respect to a High Value
Account that results in one or more U.S. indicia described in
subparagraph B(1) of this section being associated with the account,
then the Reporting Malaysian Financial Institution must treat the
account as a U.S. Reportable Account unless it elects to apply
subparagraph B(4) of this section and one of the exceptions in such
subparagraph applies with respect to that account.
5. A Reporting Malaysian Financial Institution must implement
procedures to ensure that a relationship manager identifies any
change in circumstances of an account. For example, if a relationship
manager is notified that the Account Holder has a new mailing address
in the United States, the Reporting Malaysian Financial Institution is
required to treat the new address as a change in circumstances and, if
it elects to apply subparagraph B(4) of this section, is required to
obtain the appropriate documentation from the Account Holder.
F. Preexisting Individual Accounts That Have Been Documented for
Certain Other Purposes. A Reporting Malaysian Financial Institution that has
previously obtained documentation from an Account Holder to establish the
Account Holder’s status as neither a U.S. citizen nor a U.S. resident in order to
meet its obligations under a qualified intermediary, withholding foreign
partnership, or withholding foreign trust agreement with the IRS, or to fulfill its
obligations under chapter 61 of Title 26 of the United States Code, is not required
to perform the procedures described in subparagraph B(1) of this section with
respect to Lower Value Accounts or subparagraphs D(1) through D(3) of this
section with respect to High Value Accounts.
III. New Individual Accounts. The following rules and procedures apply for
purposes of identifying U.S. Reportable Accounts among Financial Accounts held by
individuals and opened on or after July 1, 2014 (“New Individual Accounts”).
A. Accounts Not Required to Be Reviewed, Identified, or Reported. Unless
the Reporting Malaysian Financial Institution elects otherwise, either with respect
to all New Individual Accounts or, separately, with respect to any clearly
identified group of such accounts, where the implementing rules in Malaysia
provide for such an election, the following New Individual Accounts are not
required to be reviewed, identified, or reported as U.S. Reportable Accounts:
1. A Depository Account unless the account balance exceeds $50,000 at
the end of any calendar year or other appropriate reporting period.
2. A Cash Value Insurance Contract unless the Cash Value exceeds
$50,000 at the end of any calendar year or other appropriate reporting
period.
B. Other New Individual Accounts. With respect to New Individual Accounts
not described in paragraph A of this section, upon account opening (or within 90
days after the end of the calendar year in which the account ceases to be
described in paragraph A of this section), the Reporting Malaysian Financial
Institution must obtain a self-certification, which may be part of the account
opening documentation, that allows the Reporting Malaysian Financial Institution
to determine whether the Account Holder is resident in the United States for tax
purposes (for this purpose, a U.S. citizen is considered to be resident in the United
States for tax purposes, even if the Account Holder is also a tax resident of another
jurisdiction) and confirm the reasonableness of such self-certification based on
the information obtained by the Reporting Malaysian Financial Institution in
connection with the opening of the account, including any documentation
collected pursuant to AML/KYC Procedures.
1. If the self-certification establishes that the Account Holder is resident
in the United States for tax purposes, the Reporting Malaysian Financial
Institution must treat the account as a U.S. Reportable Account and obtain a
self-certification that includes the Account Holder’s U.S. TIN (which may be
an IRS Form W-9 or other similar agreed form).
2. If there is a change of circumstances with respect to a New Individual
Account that causes the Reporting Malaysian Financial Institution to know,
or have reason to know, that the original self-certification is incorrect or
unreliable, the Reporting Malaysian Financial Institution cannot rely on the
original self-certification and must obtain a valid self-certification that
establishes whether the Account Holder is a U.S. citizen or resident for U.S.
tax purposes. If the Reporting Malaysian Financial Institution is unable to
obtain a valid self-certification, the Reporting Malaysian Financial
Institution must treat the account as a U.S. Reportable Account.
IV. Preexisting Entity Accounts. The following rules and procedures apply for
purposes of identifying U.S. Reportable Accounts and accounts held by Non-Participating
Financial Institutions among Preexisting Accounts held by Entities (“Preexisting Entity
Accounts”).
A. Entity Accounts Not Required to Be Reviewed, Identified or Reported.
Unless the Reporting Malaysian Financial Institution elects otherwise, either with
respect to all Preexisting Entity Accounts or, separately, with respect to any
clearly identified group of such accounts, where the implementing rules in
Malaysia provide for such an election, a Preexisting Entity Account with an
account balance or value that does not exceed $250,000 as of June 30, 2014, is not
required to be reviewed, identified, or reported as a U.S. Reportable Account until
the account balance or value exceeds $1,000,000.
B. Entity Accounts Subject to Review. A Preexisting Entity Account that has
an account balance or value that exceeds $250,000 as of June 30, 2014, and a
Preexisting Entity Account that does not exceed $250,000 as of June 30, 2014 but
the account balance or value of which exceeds $1,000,000 as of the last day of
2015 or any subsequent calendar year, must be reviewed in accordance with the
procedures set forth in paragraph D of this section.
C. Entity Accounts With Respect to Which Reporting Is Required. With
respect to Preexisting Entity Accounts described in paragraph B of this section,
only accounts that are held by one or more Entities that are Specified U.S. Persons,
or by Passive NFFEs with one or more Controlling Persons who are U.S. citizens or
residents, shall be treated as U.S. Reportable Accounts. In addition, accounts held
by Non-Participating Financial Institutions shall be treated as accounts for which
aggregate payments as described in subparagraph 1(b) of Article 4 of the
Agreement are reported to the Malaysian Competent Authority.
D. Review Procedures for Identifying Entity Accounts With Respect to
Which Reporting Is Required. For Preexisting Entity Accounts described in
paragraph B of this section, the Reporting Malaysian Financial Institution must
apply the following review procedures to determine whether the account is held
by one or more Specified U.S. Persons, by Passive NFFEs with one or more
Controlling Persons who are U.S. citizens or residents, or by Non-Participating
Financial Institutions:
1. Determine Whether the Entity Is a Specified U.S. Person.
a) Review information maintained for regulatory or customer
relationship purposes (including information collected pursuant
to AML/KYC Procedures) to determine whether the information
indicates that the Account Holder is a U.S. Person. For this
purpose, information indicating that the Account Holder is a U.S.
Person includes a U.S. place of incorporation or organization, or a
U.S. address.
b) If the information indicates that the Account Holder is a U.S.
Person, the Reporting Malaysian Financial Institution must treat
the account as a U.S. Reportable Account unless it obtains a self-
certification from the Account Holder (which may be on an IRS
Form W-8 or W-9, or a similar agreed form), or reasonably
determines based on information in its possession or that is
publicly available, that the Account Holder is not a Specified U.S.
Person.
2. Determine Whether a Non‐U.S. Entity Is a Financial Institution.
a) Review information maintained for regulatory or customer
relationship purposes (including information collected pursuant
to AML/KYC Procedures) to determine whether the information
indicates that the Account Holder is a Financial Institution.
b) If the information indicates that the Account Holder is a Financial
Institution, or the Reporting Malaysian Financial Institution
verifies the Account Holder’s Global Intermediary Identification
Number on the published IRS FFI list, then the account is not a
U.S. Reportable Account.
3. Determine Whether a Financial Institution Is a Non‐Participating
Financial Institution Payments to Which Are Subject to Aggregate
Reporting Under Subparagraph 1(b) of Article 4 of the Agreement.
a) Subject to subparagraph D(3)(b) of this section, a Reporting
Malaysian Financial Institution may determine that the Account
Holder is a Malaysian Financial Institution or other Partner
Jurisdiction Financial Institution if the Reporting Malaysian
Financial Institution reasonably determines that the Account
Holder has such status on the basis of the Account Holder’s
Global Intermediary Identification Number on the published IRS
FFI list or other information that is publicly available or in the
possession of the Reporting Malaysian Financial Institution, as
applicable. In such case, no further review, identification, or
reporting is required with respect to the account.
b) If the Account Holder is a Malaysian Financial Institution or other
Partner Jurisdiction Financial Institution treated by the IRS as a
Non-Participating Financial Institution, then the account is not a
U.S. Reportable Account, but payments to the Account Holder
must be reported as contemplated in subparagraph 1(b) of
Article 4 of the Agreement.
c) If the Account Holder is not a Malaysian Financial Institution or
other Partner Jurisdiction Financial Institution, then the
Reporting Malaysian Financial Institution must treat the Account
Holder as a Non-Participating Financial Institution payments to
which are reportable under subparagraph 1(b) of Article 4 of the
Agreement, unless the Reporting Malaysian Financial Institution:
(1) Obtains a self-certification (which may be on an IRS Form
W-8 or similar agreed form) from the Account Holder that it
is a certified deemed-compliant FFI, or an exempt beneficial
owner, as those terms are defined in relevant U.S. Treasury
Regulations; or
(2) In the case of a participating FFI or registered deemed-
compliant FFI, verifies the Account Holder’s Global
Intermediary Identification Number on the published IRS
FFI list.
4. Determine Whether an Account Held by an NFFE Is a U.S.
Reportable Account. With respect to an Account Holder of a Preexisting
Entity Account that is not identified as either a U.S. Person or a Financial
Institution, the Reporting Malaysian Financial Institution must identify (i)
whether the Account Holder has Controlling Persons, (ii) whether the
Account Holder is a Passive NFFE, and (iii) whether any of the Controlling
Persons of the Account Holder is a U.S. citizen or resident. In making these
determinations the Reporting Malaysian Financial Institution must follow
the guidance in subparagraphs D(4)(a) through D(4)(d) of this section in the
order most appropriate under the circumstances.
a) For purposes of determining the Controlling Persons of an Account
Holder, a Reporting Malaysian Financial Institution may rely on
information collected and maintained pursuant to AML/KYC
Procedures.
b) For purposes of determining whether the Account Holder is a Passive
NFFE, the Reporting Malaysian Financial Institution must obtain a self-
certification (which may be on an IRS Form W-8 or W-9, or on a similar
agreed form) from the Account Holder to establish its status, unless it
has information in its possession or that is publicly available, based on
which it can reasonably determine that the Account Holder is an Active
NFFE.
c) For purposes of determining whether a Controlling Person of a Passive
NFFE is a U.S. citizen or resident for tax purposes, a Reporting
Malaysian Financial Institution may rely on:
(1) Information collected and maintained pursuant to AML/KYC
Procedures in the case of a Preexisting Entity Account held by
one or more NFFEs with an account balance or value that does
not exceed $1,000,000; or
(2) A self-certification (which may be on an IRS Form W-8 or W-9, or
on a similar agreed form) from the Account Holder or such
Controlling Person in the case of a Preexisting Entity Account
held by one or more NFFEs with an account balance or value that
exceeds $1,000,000.
d) If any Controlling Person of a Passive NFFE is a U.S. citizen or resident,
the account shall be treated as a U.S. Reportable Account.
E. Timing of Review and Additional Procedures Applicable to Preexisting
Entity Accounts.
1. Review of Preexisting Entity Accounts with an account balance or
value that exceeds $250,000 as of June 30, 2014 must be completed by June
30, 2016.
2. Review of Preexisting Entity Accounts with an account balance or
value that does not exceed $250,000 as of June 30, 2014, but exceeds
$1,000,000 as of December 31 of 2015 or any subsequent year, must be
completed within six months after the last day of the calendar year in which
the account balance or value exceeds $1,000,000.
3. If there is a change of circumstances with respect to a Preexisting
Entity Account that causes the Reporting Malaysian Financial Institution to
know, or have reason to know, that the self-certification or other
documentation associated with an account is incorrect or unreliable, the
Reporting Malaysian Financial Institution must redetermine the status of the
account in accordance with the procedures set forth in paragraph D of this
section.
V. New Entity Accounts. The following rules and procedures apply for purposes of
identifying U.S. Reportable Accounts and accounts held by Non-Participating
Financial Institutions among Financial Accounts held by Entities and opened on or
after July 1, 2014 (“New Entity Accounts”).
A. Entity Accounts Not Required to Be Reviewed, Identified or Reported.
Unless the Reporting Malaysian Financial Institution elects otherwise, either with
respect to all New Entity Accounts or, separately, with respect to any clearly
identified group of such accounts, where the implementing rules in Malaysia
provide for such election, a credit card account or a revolving credit facility
treated as a New Entity Account is not required to be reviewed, identified, or
reported, provided that the Reporting Malaysian Financial Institution maintaining
such account implements policies and procedures to prevent an account balance
owed to the Account Holder that exceeds $50,000.
B. Other New Entity Accounts. With respect to New Entity Accounts not
described in paragraph A of this section, the Reporting Malaysian Financial
Institution must determine whether the Account Holder is: (i) a Specified U.S.
Person; (ii) a Malaysian Financial Institution or other Partner Jurisdiction
Financial Institution; (iii) a participating FFI, a deemed-compliant FFI, or an
exempt beneficial owner, as those terms are defined in relevant U.S. Treasury
Regulations; or (iv) an Active NFFE or Passive NFFE.
1. Subject to subparagraph B(2) of this section, a Reporting Malaysian
Financial Institution may determine that the Account Holder is an Active
NFFE, a Malaysian Financial Institution, or other Partner Jurisdiction
Financial Institution if the Reporting Malaysian Financial Institution
reasonably determines that the Account Holder has such status on the basis
of the Account Holder’s Global Intermediary Identification Number or other
information that is publicly available or in the possession of the Reporting
Malaysian Financial Institution, as applicable.
2. If the Account Holder is a Malaysian Financial Institution or other
Partner Jurisdiction Financial Institution treated by the IRS as a Non-
Participating Financial Institution, then the account is not a U.S. Reportable
Account, but payments to the Account Holder must be reported as
contemplated in subparagraph 1(b) of Article 4 of the Agreement.
3. In all other cases, a Reporting Malaysian Financial Institution must
obtain a self-certification from the Account Holder to establish the Account
Holder’s status. Based on the self-certification, the following rules apply:
a) If the Account Holder is a Specified U.S. Person, the Reporting
Malaysian Financial Institution must treat the account as a U.S.
Reportable Account.
b) If the Account Holder is a Passive NFFE, the Reporting Malaysian
Financial Institution must identify the Controlling Persons as
determined under AML/KYC Procedures, and must determine whether
any such person is a U.S. citizen or resident on the basis of a self-
certification from the Account Holder or such person. If any such
person is a U.S. citizen or resident, the Reporting Malaysian Financial
Institution must treat the account as a U.S. Reportable Account.
c) If the Account Holder is: (i) a U.S. Person that is not a Specified
U.S. Person; (ii) subject to subparagraph B(3)(d) of this section, a
Malaysian Financial Institution or other Partner Jurisdiction Financial
Institution; (iii) a participating FFI, a deemed-compliant FFI, or an
exempt beneficial owner, as those terms are defined in relevant U.S.
Treasury Regulations; (iv) an Active NFFE; or (v) a Passive NFFE none
of the Controlling Persons of which is a U.S. citizen or resident, then
the account is not a U.S. Reportable Account, and no reporting is
required with respect to the account.
d) If the Account Holder is a Non-Participating Financial Institution
(including a Malaysian Financial Institution or other Partner
Jurisdiction Financial Institution treated by the IRS as a Non-
Participating Financial Institution), then the account is not a U.S.
Reportable Account, but payments to the Account Holder must be
reported as contemplated in subparagraph 1(b) of Article 4 of the
Agreement.
VI. Special Rules and Definitions. The following additional rules and definitions
apply in implementing the due diligence procedures described above:
A. Reliance on Self‐Certifications and Documentary Evidence. A Reporting
Malaysian Financial Institution may not rely on a self-certification or
documentary evidence if the Reporting Malaysian Financial Institution knows or
has reason to know that the self-certification or documentary evidence is
incorrect or unreliable.
B. Definitions. The following definitions apply for purposes of this Annex I.
1. AML/KYC Procedures. “AML/KYC Procedures” means the customer
due diligence procedures of a Reporting Malaysian Financial Institution
pursuant to the anti-money laundering or similar requirements of Malaysia
to which such Reporting Malaysian Financial Institution is subject.
2. NFFE. An “NFFE” means any Non-U.S. Entity that is not an FFI as
defined in relevant U.S. Treasury Regulations or is an Entity described in
subparagraph B(4)(j) of this section, and also includes any Non-U.S. Entity
that is established in Malaysia or another Partner Jurisdiction and that is not
a Financial Institution.
3. Passive NFFE. A “Passive NFFE” means any NFFE that is not (i) an
Active NFFE, or (ii) a withholding foreign partnership or withholding foreign
trust pursuant to relevant U.S. Treasury Regulations.
4. Active NFFE. An “Active NFFE” means any NFFE that meets any of the
following criteria:
a) Less than 50 percent of the NFFE’s gross income for the
preceding calendar year or other appropriate reporting period is
passive income and less than 50 percent of the assets held by the
NFFE during the preceding calendar year or other appropriate
reporting period are assets that produce or are held for the
production of passive income;
b) The stock of the NFFE is regularly traded on an established
securities market or the NFFE is a Related Entity of an Entity the
stock of which is regularly traded on an established securities
market;
c) The NFFE is organized in a U.S. Territory and all of the owners of
the payee are bona fide residents of that U.S. Territory;
d) The NFFE is a government (other than the U.S. government), a
political subdivision of such government (which, for the
avoidance of doubt, includes a state, province, county, or
municipality), or a public body performing a function of such
government or a political subdivision thereof, a government of a
e)
f)
g)
h)
i)
j)
U.S. Territory, an international organization, a non-U.S. central
bank of issue, or an Entity wholly owned by one or more of the
foregoing;
Substantially all of the activities of the NFFE consist of holding (in
whole or in part) the outstanding stock of, or providing financing
and services to, one or more subsidiaries that engage in trades or
businesses other than the business of a Financial Institution,
except that an entity shall not qualify for NFFE status if the entity
functions (or holds itself out) as an investment fund, such as a
private equity fund, venture capital fund, leveraged buyout fund,
or any investment vehicle whose purpose is to acquire or fund
companies and then hold interests in those companies as capital
assets for investment purposes;
The NFFE is not yet operating a business and has no prior
operating history, but is investing capital into assets with the
intent to operate a business other than that of a Financial
Institution, provided that the NFFE shall not qualify for this
exception after the date that is 24 months after the date of the
initial organization of the NFFE;
The NFFE was not a Financial Institution in the past five years,
and is in the process of liquidating its assets or is reorganizing
with the intent to continue or recommence operations in a
business other than that of a Financial Institution;
The NFFE primarily engages in financing and hedging
transactions with, or for, Related Entities that are not Financial
Institutions, and does not provide financing or hedging services
to any Entity that is not a Related Entity, provided that the group
of any such Related Entities is primarily engaged in a business
other than that of a Financial Institution;
The NFFE is an “excepted NFFE” as described in relevant U.S.
Treasury Regulations; or
The NFFE meets all of the following requirements:
i. It is established and operated in its jurisdiction of residence
exclusively for religious, charitable, scientific, artistic,
cultural, athletic, or educational purposes; or it is
established and operated in its jurisdiction of residence and
it is a professional organization, business league, chamber
of commerce, labor organization, agricultural or
horticultural organization, civic league or an organization
operated exclusively for the promotion of social welfare;
ii. It is exempt from income tax in its jurisdiction of residence;
iii. It has no shareholders or members who have a proprietary
or beneficial interest in its income or assets;
iv. The applicable laws of the NFFE’s jurisdiction of residence
or the NFFE’s formation documents do not permit any
income or assets of the NFFE to be distributed to, or applied
for the benefit of, a private person or non-charitable Entity
other than pursuant to the conduct of the NFFE’s charitable
activities, or as payment of reasonable compensation for
services rendered, or as payment representing the fair
market value of property which the NFFE has purchased;
and
v. The applicable laws of the NFFE’s jurisdiction of residence
or the NFFE’s formation documents require that, upon the
NFFE’s liquidation or dissolution, all of its assets be
distributed to a governmental entity or other non-profit
organization, or escheat to the government of the NFFE’s
jurisdiction of residence or any political subdivision
thereof.
5. Preexisting Account. A “Preexisting Account” means a Financial
Account maintained by a Reporting Malaysian Financial Institution as of
June 30, 2014.
C. Account Balance Aggregation and Currency Translation Rules.
1. Aggregation of Individual Accounts. For purposes of determining
the aggregate balance or value of Financial Accounts held by an individual, a
Reporting Malaysian Financial Institution is required to aggregate all
Financial Accounts maintained by the Reporting Malaysian Financial
Institution, or by a Related Entity, but only to the extent that the Reporting
Malaysian Financial Institution’s computerized systems link the Financial
Accounts by reference to a data element such as client number or taxpayer
identification number, and allow account balances or values to be
aggregated. Each holder of a jointly held Financial Account shall be
attributed the entire balance or value of the jointly held Financial Account
for purposes of applying the aggregation requirements described in this
paragraph 1.
2. Aggregation of Entity Accounts. For purposes of determining the
aggregate balance or value of Financial Accounts held by an Entity, a
Reporting Malaysian Financial Institution is required to take into account all
Financial Accounts that are maintained by the Reporting Malaysian
Financial Institution, or by a Related Entity, but only to the extent that the
Reporting Malaysian Financial Institution’s computerized systems link the
Financial Accounts by reference to a data element such as client number or
taxpayer identification number, and allow account balances or values to be
aggregated.
3. Special Aggregation Rule Applicable to Relationship Managers.
For purposes of determining the aggregate balance or value of Financial
Accounts held by a person to determine whether a Financial Account is a
High Value Account, a Reporting Malaysian Financial Institution is also
required, in the case of any Financial Accounts that a relationship manager
knows, or has reason to know, are directly or indirectly owned, controlled,
or established (other than in a fiduciary capacity) by the same person, to
aggregate all such accounts.
4. Currency Translation Rule. For purposes of determining the balance
or value of Financial Accounts denominated in a currency other than the U.S.
dollar, a Reporting Malaysian Financial Institution must convert the U.S.
dollar threshold amounts described in this Annex I into such currency using
a published spot rate determined as of the last day of the calendar year
preceding the year in which the Reporting Malaysian Financial Institution is
determining the balance or value.
D. Documentary Evidence. For purposes of this Annex I, acceptable
documentary evidence includes any of the following:
1. A certificate of residence issued by an authorized government body
(for example, a government or agency thereof, or a municipality) of the
jurisdiction in which the payee claims to be a resident.
2. With respect to an individual, any valid identification issued by an
authorized government body (for example, a government or agency thereof,
or a municipality), that includes the individual’s name and is typically used
for identification purposes.
3. With respect to an Entity, any official documentation issued by an
authorized government body (for example, a government or agency thereof,
or a municipality) that includes the name of the Entity and either the
address of its principal office in the jurisdiction (or U.S. Territory) in which
it claims to be a resident or the jurisdiction (or U.S. Territory) in which the
Entity was incorporated or organized.
4. With respect to a Financial Account maintained in a jurisdiction with
anti-money laundering rules that have been approved by the IRS in
connection with a QI agreement (as described in relevant U.S. Treasury
Regulations), any of the documents, other than a Form W-8 or W-9,
referenced in the jurisdiction’s attachment to the QI agreement for
identifying individuals or Entities.
5. Any financial statement, third-party credit report, bankruptcy filing, or
U.S. Securities and Exchange Commission report.
E. Alternative Procedures for Financial Accounts Held by Individual
Beneficiaries of a Cash Value Insurance Contract. A Reporting Malaysian
Financial Institution may presume that an individual beneficiary (other than the
owner) of a Cash Value Insurance Contract receiving a death benefit is not a
Specified U.S. Person and may treat such Financial Account as other than a U.S.
Reportable Account unless the Reporting Malaysian Financial Institution has
actual knowledge, or reason to know, that the beneficiary is a Specified U.S.
Person. A Reporting Malaysian Financial Institution has reason to know that a
beneficiary of a Cash Value Insurance Contract is a Specified U.S. Person if the
information collected by the Reporting Malaysian Financial Institution and
associated with the beneficiary contains U.S. indicia as described in subparagraph
(B)(1) of section II of this Annex I. If a Reporting Malaysian Financial Institution
has actual knowledge, or reason to know, that the beneficiary is a Specified U.S.
Person, the Reporting Malaysian Financial Institution must follow the procedures
in subparagraph B(3) of section II of this Annex I.
F. Reliance on Third Parties. Regardless of whether an election is made
under paragraph C of section I of this Annex I, Malaysia may permit Reporting
Malaysian Financial Institutions to rely on due diligence procedures performed by
third parties, to the extent provided in relevant U.S. Treasury Regulations.
G. Alternative Proc edures for New Accounts Opened Prior to Entry Into
Force of this Agreement.
1. Applicability. If Malaysia has provided a written notice to the United
States prior to entry into force of this Agreement that, as of July 1, 2014,
Malaysia lacked the legal authority to require Reporting Malaysian Financial
Institutions either: (i) to require Account Holders of New Individual
Accounts to provide the self-certification specified in section III of this
Annex I, or (ii) to perform all the due diligence procedures related to New
Entity Accounts specified in section V of this Annex I, then Reporting
Malaysian Financial Institutions may apply the alternative procedures
described in subparagraph G(2) of this section, as applicable, to such New
Accounts, in lieu of the procedures otherwise required under this Annex I.
The alternative procedures described in subparagraph G(2) of this section
shall be available only for those New Individual Accounts or New Entity
Accounts, as applicable, opened prior to the earlier of: (i) the date Malaysia
has the ability to compel Reporting Malaysian Financial Institutions to
comply with the due diligence procedures described in section III or section
V of this Annex I, as applicable, which date Malaysia shall inform the United
States of in writing by the date of entry into force of this Agreement, or (ii)
the date of entry into force of this Agreement. If the alternative procedures
for New Entity Accounts opened on or after July 1, 2014, and before January
1, 2015, described in paragraph H of this section are applied with respect to
all New Entity Accounts or a clearly identified group of such accounts, the
alternative procedures described in this paragraph G may not be applied
with respect to such New Entity Accounts. For all other New Accounts,
Reporting Malaysian Financial Institutions must apply the due diligence
procedures described in section III or section V of this Annex I, as applicable,
to determine if the account is a U.S. Reportable Account or an account held
by a Non-Participating Financial Institution.
2. Alternative Procedures.
a) Within one year after the date of entry into force of this
Agreement, Reporting Malaysian Financial Institutions must: (i)
with respect to a New Individual Account described in
subparagraph G(1) of this section, request the self-certification
specified in section III of this Annex I and confirm the
reasonableness of such self-certification consistent with the
procedures described in section III of this Annex I, and (ii) with
respect to a New Entity Account described in subparagraph G(1)
of this section, perform the due diligence procedures specified in
section V of this Annex I and request information as necessary to
document the account, including any self-certification, required
by section V of this Annex I.
b) Malaysia must report on any New Account that is identified
pursuant to subparagraph G(2)(a) of this section as a U.S.
Reportable Account or as an account held by a Non-Participating
Financial Institution, as applicable, by the date that is the later of:
(i) September 30 next following the date that the account is
identified as a U.S. Reportable Account or as an account held by a
Non-Participating Financial Institution, as applicable, or (ii) 90
days after the account is identified as a U.S. Reportable Account
or as an account held by a Non-Participating Financial Institution,
as applicable. The information required to be reported with
respect to such a New Account is any information that would
have been reportable under this Agreement if the New Account
had been identified as a U.S. Reportable Account or as an account
held by a Non-Participating Financial Institution, as applicable, as
of the date the account was opened.
c) By the date that is one year after the date of entry into force of
this Agreement, Reporting Malaysian Financial Institutions must
close any New Account described in subparagraph G(1) of this
section for which it was unable to collect the required self-
certification or other documentation pursuant to the procedures
described in subparagraph G(2)(a) of this section. In addition, by
the date that is one year after the date of entry into force of this
Agreement, Reporting Malaysian Financial Institutions must: (i)
with respect to such closed accounts that prior to such closure
were New Individual Accounts (without regard to whether such
accounts were High Value Accounts), perform the due diligence
procedures specified in paragraph D of section II of this Annex I,
or (ii) with respect to such closed accounts that prior to such
closure were New Entity Accounts, perform the due diligence
procedures specified in section IV of this Annex I.
d) Malaysia must report on any closed account that is identified
pursuant to subparagraph G(2)(c) of this section as a U.S.
Reportable Account or as an account held by a Non-Participating
Financial Institution, as applicable, by the date that is the later of:
(i) September 30 next following the date that the account is
identified as a U.S. Reportable Account or as an account held by a
Non-Participating Financial Institution, as applicable, or (ii) 90
days after the account is identified as a U.S. Reportable Account
or as an account held by a Non-Participating Financial Institution,
as applicable. The information required to be reported for such a
closed account is any information that would have been
reportable under this Agreement if the account had been
identified as a U.S. Reportable Account or as an account held by a
Non-Participating Financial Institution, as applicable, as of the
date the account was opened.
H. Alternative Procedures for New Entity Accounts Opened on or after
July 1, 2014, and before January 1, 2015. For New Entity Accounts opened on
or after July 1, 2014, and before January 1, 2015, either with respect to all New
Entity Accounts or, separately, with respect to any clearly identified group of such
accounts, Malaysia may permit Reporting Malaysian Financial Institutions to treat
such accounts as Preexisting Entity Accounts and apply the due diligence
procedures related to Preexisting Entity Accounts specified in section IV of this
Annex I in lieu of the due diligence procedures specified in section V of this Annex
I. In this case, the due diligence procedures of section IV of this Annex I must be
applied without regard to the account balance or value threshold specified in
paragraph A of section IV of this Annex I.
ANNEX II
The following Entities shall be treated as exempt beneficial owners or deemed-
compliant FFIs, as the case may be, and the following accounts are excluded from the
definition of Financial Accounts.
This Annex II may be modified by a mutual written decision entered into between the
Competent Authorities of Malaysia and the United States: (1) to include additional
Entities and accounts that present a low risk of being used by U.S. Persons to evade U.S.
tax and that have similar characteristics to the Entities and accounts described in this
Annex II as of the date of signature of the Agreement; or (2) to remove Entities and
accounts that, due to changes in circumstances, no longer present a low risk of being
used by U.S. Persons to evade U.S. tax. Any such addition or removal shall be effective
on the date of signature of the mutual decision, unless otherwise provided therein.
Procedures for reaching such a mutual decision may be included in the mutual
agreement or arrangement described in paragraph 6 of Article 3 of the Agreement.
I. Exempt Beneficial Owners other than Funds. The following Entities shall be
treated as Non-Reporting Malaysian Financial Institutions and as exempt beneficial
owners for purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code,
other than with respect to a payment that is derived from an obligation held in
connection with a commercial financial activity of a type engaged in by a Specified
Insurance Company, Custodial Institution, or Depository Institution.
A. Governmental Entity. The Government of Malaysia, any political
subdivision of Malaysia (which, for the avoidance of doubt, includes a state,
province, county, or municipality), or any wholly owned agency or
instrumentality of Malaysia or any one or more of the foregoing (each, a
“Malaysian Governmental Entity”). This category is comprised of the
integral parts, controlled entities, and political subdivisions of Malaysia.
1. An integral part of Malaysia means any person, organization, agency,
bureau, fund, instrumentality, or other body, however designated, that
constitutes a governing authority of Malaysia. The net earnings of the
governing authority must be credited to its own account or to other
accounts of Malaysia, with no portion inuring to the benefit of any
private person. An integral part does not include any individual who is
a sovereign, official, or administrator acting in a private or personal
capacity.
2. A controlled entity means an Entity that is separate in form from
Malaysia or that otherwise constitutes a separate juridical entity,
provided that:
a) The Entity is wholly owned and controlled by one or more
Malaysian Governmental Entities directly or through one or more
controlled entities;
b) The Entity’s net earnings are credited to its own account or to the
accounts of one or more Malaysian Governmental Entities, with
no portion of its income inuring to the benefit of any private
person; and
c) The Entity’s assets vest in one or more Malaysian Governmental
Entities upon dissolution.
3. Income does not inure to the benefit of private persons if such persons
are the intended beneficiaries of a governmental program, and the
program activities are performed for the general public with respect to
the common welfare or relate to the administration of some phase of
government. Notwithstanding the foregoing, however, income is
considered to inure to the benefit of private persons if the income is
derived from the use of a governmental entity to conduct a commercial
business, such as a commercial banking business, that provides
financial services to private persons.
B. International Organization. Any international organization or wholly
owned agency or instrumentality thereof. This category includes any
intergovernmental organization (including a supranational organization) (1)
that is comprised primarily of non-U.S. governments; (2) that has in effect a
headquarters or substantially similar agreement with Malaysia; and (3) the
income of which does not inure to the benefit of private persons.
C. Central Bank. An institution that is by law or government sanction the
principal authority, other than the government of Malaysia itself, issuing
instruments intended to circulate as currency. Such an institution may
include an instrumentality that is separate from the government of Malaysia,
whether or not owned in whole or in part by Malaysia.
II. Funds that Qualify as Exempt Beneficial Owners. The following Entities shall
be treated as Non-Reporting Malaysian Financial Institutions and as exempt
beneficial owners for purposes of sections 1471 and 1472 of the U.S. Internal
Revenue Code.
A. Broad Participation Retirement Fund. A fund established in Malaysia to
provide retirement, disability, or death benefits, or any combination thereof,
to beneficiaries that are current or former employees (or persons designated
by such employees) of one or more employers in consideration for services
rendered, provided that the fund:
1. Does not have a single beneficiary with a right to more than five
percent of the fund’s assets;
2. Is subject to government regulation and either (a) provides annual
information reporting about its beneficiaries to the relevant tax
authorities in Malaysia or (b) is overseen by the Ministry of Finance of
Malaysia, produces annual information statements of its beneficiaries,
which are available upon request, to the relevant tax authorities in
Malaysia; and
3. Satisfies at least one of the following requirements:
a) The fund is generally exempt from tax in Malaysia on investment
income under the laws of Malaysia due to its status as a
retirement or pension plan;
b) The fund receives at least 50 percent of its total contributions
(other than transfers of assets from other plans described in
paragraphs A through C of this section or from retirement and
pension accounts described in subparagraph A(1) of section V of
this Annex II) from the sponsoring employers;
c) Distributions or withdrawals from the fund are allowed only upon
the occurrence of specified events related to retirement,
disability, or death (except rollover distributions to other
retirement funds described in paragraphs A through C of this
section or retirement and pension accounts described in
subparagraph A(1) of section V of this Annex II), or penalties
apply to distributions or withdrawals made before such specified
events; or
d) Contributions (other than certain permitted make-up
contributions) by employees to the fund are limited by reference
to earned income of the employee or may not exceed $50,000
annually, applying the rules set forth in Annex I for account
aggregation and currency translation.
III. Small or Limited Scope Financial Institutions that Qualify as Deemed‐
Compliant FFIs. The following Financial Institutions are Non-Reporting
Malaysian Financial Institutions that shall be treated as deemed-compliant FFIs
for purposes of section 1471 of the U.S. Internal Revenue Code.
A. Financial Institution with a Local Client Base. A Financial Institution
satisfying the following requirements:
1. The Financial Institution must be licensed and regulated as a financial
institution under the laws of Malaysia;
2. The Financial Institution must have no fixed place of business outside
of Malaysia. For this purpose, a fixed place of business does not
include a location that is not advertised to the public and from which
the Financial Institution performs solely administrative support
functions;
3. The Financial Institution must not solicit customers or Account
Holders outside Malaysia. For this purpose, a Financial Institution
shall not be considered to have solicited customers or Account Holders
outside Malaysia merely because the Financial Institution (a) operates
a website, provided that the website does not specifically indicate that
the Financial Institution provides Financial Accounts or services to
nonresidents, and does not otherwise target or solicit U.S. customers or
Account Holders, or (b) advertises in print media or on a radio or
television station that is distributed or aired primarily within Malaysia
but is also incidentally distributed or aired in other countries, provided
that the advertisement does not specifically indicate that the Financial
Institution provides Financial Accounts or services to nonresidents,
and does not otherwise target or solicit U.S. customers or Account
Holders;
4. The Financial Institution must be required under the laws of Malaysia
to identify resident Account Holders for purposes of either information
reporting or withholding of tax with respect to Financial Accounts held
by residents or for purposes of satisfying Malaysia’s AML due diligence
requirements;
5. At least 98 percent of the Financial Accounts by value maintained by
the Financial Institution must be held by residents (including residents
that are Entities) of Malaysia;
6. By the later of July 1, 2014, or the date that the Financial Institution
claims treatment as a deemed-compliant FFI pursuant to this
paragraph A, the Financial Institution must have policies and
procedures, consistent with those set forth in Annex I, to prevent the
Financial Institution from providing a Financial Account to any Non-
Participating Financial Institution and to monitor whether the
Financial Institution opens or maintains a Financial Account for any
Specified U.S. Person who is not a resident of Malaysia (including a U.S.
Person that was a resident of Malaysia when the Financial Account was
opened but subsequently ceases to be a resident of Malaysia) or any
Passive NFFE with Controlling Persons who are U.S. residents or U.S.
citizens who are not residents of Malaysia;
7. Such policies and procedures must provide that if any Financial
Account held by a Specified U.S. Person who is not a resident of
Malaysia or by a Passive NFFE with Controlling Persons who are U.S.
residents or U.S. citizens who are not residents of Malaysia is
identified, the Financial Institution must report such Financial Account
as would be required if the Financial Institution were a Reporting
Malaysian Financial Institution (including by following the applicable
registration requirements on the IRS FATCA registration website) or
close such Financial Account;
8. With respect to a Preexisting Account held by an individual who is not
a resident of Malaysia or by an Entity, the Financial Institution must
review those Preexisting Accounts in accordance with the procedures
set forth in Annex I applicable to Preexisting Accounts to identify any
U.S. Reportable Account or Financial Account held by a Non-
Participating Financial Institution, and must report such Financial
Account as would be required if the Financial Institution were a
Reporting Malaysian Financial Institution (including by following the
applicable registration requirements on the IRS FATCA registration
website) or close such Financial Account;
9. Each Related Entity of the Financial Institution that is a Financial
Institution must be incorporated or organized in Malaysia and, with
the exception of any Related Entity that is a retirement fund described
in paragraphs A through C of section II of this Annex II, satisfy the
requirements set forth in this paragraph A; and
10. The Financial Institution must not have policies or practices that
discriminate against opening or maintaining Financial Accounts for
individuals who are Specified U.S. Persons and residents of Malaysia.
B. Local Bank. A Financial Institution satisfying the following requirements:
1. The Financial Institution operates solely as (and is licensed and
regulated under the laws of Malaysia as) (a) a bank or (b) a credit
union or similar cooperative credit organization that is operated
without profit;
2. The Financial Institution’s business consists primarily of receiving
deposits from and making loans to, with respect to a bank, unrelated
retail customers and, with respect to a credit union or similar
cooperative credit organization, members, provided that no member
has a greater than five percent interest in such credit union or
cooperative credit organization;
3. The Financial Institution satisfies the requirements set forth in
subparagraphs A(2) and A(3) of this section, provided that, in addition
to the limitations on the website described in subparagraph A(3) of
this section, the website does not permit the opening of a Financial
Account;
4. The Financial Institution does not have more than $175 million in
assets on its balance sheet, and the Financial Institution and any
Related Entities, taken together, do not have more than $500 million in
total assets on their consolidated or combined balance sheets; and
5. Any Related Entity must be incorporated or organized in Malaysia, and
any Related Entity that is a Financial Institution, with the exception of
any Related Entity that is a retirement fund described in paragraphs A
through C of section II of this Annex II or a Financial Institution with
only low-value accounts described in paragraph C of this section, must
satisfy the requirements set forth in this paragraph B.
C. Financial Institution with Only Low‐Value Accounts. A Malaysian
Financial Institution satisfying the following requirements:
1. The Financial Institution is not an Investment Entity;
2. No Financial Account maintained by the Financial Institution or any
Related Entity has a balance or value in excess of $50,000, applying
the rules set forth in Annex I for account aggregation and currency
translation; and
3. The Financial Institution does not have more than $50 million in
assets on its balance sheet, and the Financial Institution and any
Related Entities, taken together, do not have more than $50 million in
total assets on their consolidated or combined balance sheets.
D. Qualified Credit Card Issuer. A Malaysian Financial Institution satisfying
the following requirements:
1. The Financial Institution is a Financial Institution solely because it is an
issuer of credit cards that accepts deposits only when a customer
makes a payment in excess of a balance due with respect to the card
and the overpayment is not immediately returned to the customer; and
2. By the later of July 1, 2014, or the date that the Financial Institution
claims treatment as a deemed-compliant FFI pursuant to this
paragraph D, the Financial Institution implements policies and
procedures to either prevent a customer deposit in excess of $50,000,
or to ensure that any customer deposit in excess of $50,000, in each
case applying the rules set forth in Annex I for account aggregation
and currency translation, is refunded to the customer within 60 days.
For this purpose, a customer deposit does not refer to credit balances
to the extent of disputed charges but does include credit balances
resulting from merchandise returns.
IV. Investment Entities that Qualify as Deemed‐Compliant FFIs and Other
Special Rules. The Financial Institutions described in paragraphs A through E of
this section are Non-Reporting Malaysian Financial Institutions that shall be
treated as deemed-compliant FFIs for purposes of section 1471 of the U.S. Internal
Revenue Code. In addition, paragraph F of this section provides special rules
applicable to an Investment Entity.
A. Trustee‐Documented Trust. A trust established under the laws of
Malaysia to the extent that the trustee of the trust is a Reporting U.S.
Financial Institution, Reporting Model 1 FFI, or Participating FFI and reports
all information required to be reported pursuant to the Agreement with
respect to all U.S. Reportable Accounts of the trust.
B. Sponsored Investment Entity and Controlled Foreign Corporation. A
Financial Institution described in subparagraph B(1) or B(2) of this section
having a sponsoring entity that complies with the requirements of
subparagraph B(3) of this section.
1. A Financial Institution is a sponsored investment entity if (a) it is an
Investment Entity established in Malaysia that is not a qualified
intermediary, withholding foreign partnership, or withholding foreign
trust pursuant to relevant U.S. Treasury Regulations; and (b) an Entity
has agreed with the Financial Institution to act as a sponsoring entity
for the Financial Institution.
2. A Financial Institution is a sponsored controlled foreign corporation if
(a) the Financial Institution is a controlled foreign corporation
1
organized under the laws of Malaysia that is not a qualified
intermediary, withholding foreign partnership, or withholding foreign
trust pursuant to relevant U.S. Treasury Regulations; (b) the Financial
Institution is wholly owned, directly or indirectly, by a Reporting U.S.
Financial Institution that agrees to act, or requires an affiliate of the
Financial Institution to act, as a sponsoring entity for the Financial
Institution; and (c) the Financial Institution shares a common
electronic account system with the sponsoring entity that enables the
sponsoring entity to identify all Account Holders and payees of the
Financial Institution and to access all account and customer
information maintained by the Financial Institution including, but not
limited to, customer identification information, customer
documentation, account balance, and all payments made to the
Account Holder or payee.
3. The sponsoring entity complies with the following requirements:
1
A “controlled foreign corporation” means any foreign corporation if more than 50 percent of the total combined
voting power of all classes of stock of such corporation entitled to vote, or the total value of the stock of such
corporation, is owned, or is considered as owned, by “United States shareholders” on any day during the
taxable year of such foreign corporation. The term a “United States shareholder” means, with respect to any
foreign corporation, a United States person who owns, or is considered as owning, 10 percent or more of the
total combined voting power of all classes of stock entitled to vote of such foreign corporation, or, beginning
with tax years of foreign corporations beginning after December 31, 2017, and taxable years of United States
shareholders with or within which such taxable years of foreign corporations end, 10 percent or more of the
total value of shares of all classes of stock of such foreign corporation.
a) The sponsoring entity is authorized to act on behalf of the
Financial Institution (such as a fund manager, trustee, corporate
director, or managing partner) to fulfill applicable registration
requirements on the IRS FATCA registration website;
b) The sponsoring entity has registered as a sponsoring entity with
the IRS on the IRS FATCA registration website;
c) If the sponsoring entity identifies any U.S. Reportable Accounts
with respect to the Financial Institution, the sponsoring entity
registers the Financial Institution pursuant to applicable
registration requirements on the IRS FATCA registration website
on or before the later of December 31, 2016 and the date that is
90 days after such a U.S. Reportable Account is first identified;
d) The sponsoring entity agrees to perform, on behalf of the Financial
Institution, all due diligence, withholding, reporting, and other
requirements that the Financial Institution would have been
required to perform if it were a Reporting Malaysian Financial
Institution;
e) The sponsoring entity identifies the Financial Institution and
includes the identifying number of the Financial Institution
(obtained by following applicable registration requirements on
the IRS FATCA registration website) in all reporting completed on
the Financial Institution’s behalf; and
f) The sponsoring entity has not had its status as a sponsor revoked.
C. Sponsored, Closely Held Investment Vehicle. A Malaysian Financial
Institution satisfying the following requirements:
1. The Financial Institution is a Financial Institution solely because it is an
Investment Entity and is not a qualified intermediary, withholding
foreign partnership, or withholding foreign trust pursuant to relevant
U.S. Treasury Regulations;
2. The sponsoring entity is a Reporting U.S. Financial Institution,
Reporting Model 1 FFI, or Participating FFI, is authorized to act on
behalf of the Financial Institution (such as a professional manager,
trustee, or managing partner), and agrees to perform, on behalf of the
Financial Institution, all due diligence, withholding, reporting, and
other requirements that the Financial Institution would have been
required to perform if it were a Reporting Malaysian Financial
Institution;
3. The Financial Institution does not hold itself out as an investment
vehicle for unrelated parties;
4. Twenty or fewer individuals own all of the debt interests and Equity
Interests in the Financial Institution (disregarding debt interests
owned by Participating FFIs and deemed-compliant FFIs and Equity
Interests owned by an Entity if that Entity owns 100 percent of the
Equity Interests in the Financial Institution and is itself a sponsored
Financial Institution described in this paragraph C); and
5. The sponsoring entity complies with the following requirements:
a) The sponsoring entity has registered as a sponsoring entity with
the IRS on the IRS FATCA registration website;
b) The sponsoring entity agrees to perform, on behalf of the
Financial Institution, all due diligence, withholding, reporting,
and other requirements that the Financial Institution would have
been required to perform if it were a Reporting Malaysian
Financial Institution and retains documentation collected with
respect to the Financial Institution for a period of six years;
c) The sponsoring entity identifies the Financial Institution in all
reporting completed on the Financial Institution’s behalf; and
d) The sponsoring entity has not had its status as a sponsor revoked.
D. Investment Advisors and Investment Managers. An Investment Entity
established in Malaysia that is a Financial Institution solely because it (1)
renders investment advice to, and acts on behalf of, or (2) manages
portfolios for, and acts on behalf of, a customer for the purposes of investing,
managing, or administering funds deposited in the name of the customer
with a Financial Institution other than a Non-Participating Financial
Institution.
E. Collective Investment Vehicle. An Investment Entity established in
Malaysia that is regulated as a collective investment vehicle, provided that
all of the interests in the collective investment vehicle (including debt
interests in excess of $50,000) are held by or through one or more exempt
beneficial owners, Active NFFEs described in subparagraph B(4) of section
VI of Annex I, U.S. Persons that are not Specified U.S. Persons, or Financial
Institutions that are not Non-Participating Financial Institutions.
F. Special Rules. The following rules apply to an Investment Entity:
1. With respect to interests in an Investment Entity that is a collective
investment vehicle described in paragraph E of this section, the
reporting obligations of any Investment Entity (other than a Financial
Institution through which interests in the collective investment vehicle
are held) shall be deemed fulfilled.
2. With respect to interests in:
a) An Investment Entity established in a Partner Jurisdiction that is
regulated as a collective investment vehicle, all of the interests in
which (including debt interests in excess of $50,000) are held by
or through one or more exempt beneficial owners, Active NFFEs
described in subparagraph B(4) of section VI of Annex I, U.S.
Persons that are not Specified U.S. Persons, or Financial
Institutions that are not Non-Participating Financial Institutions;
or
b) An Investment Entity that is a qualified collective investment
vehicle under relevant U.S. Treasury Regulations;
the reporting obligations of any Investment Entity that is a Malaysian
Financial Institution (other than a Financial Institution through which
interests in the collective investment vehicle are held) shall be deemed
fulfilled.
3. With respect to interests in an Investment Entity established in
Malaysia that is not described in paragraph E or subparagraph F(2) of
this section, consistent with paragraph 4 of Article 5 of the Agreement,
the reporting obligations of all other Investment Entities with respect
to such interests shall be deemed fulfilled if the information required
to be reported by the first-mentioned Investment Entity pursuant to
the Agreement with respect to such interests is reported by such
Investment Entity or another person.
V. Accounts Excluded from Financial Accounts. The following accounts are
excluded from the definition of Financial Accounts and therefore shall not be
treated as U.S. Reportable Accounts.
A. Certain Savings Accounts.
1. Retirement and Pension Account. A retirement or pension account
maintained in Malaysia that satisfies the following requirements under
the laws of Malaysia.
a) The account is subject to regulation as a personal retirement
account or is part of a registered or regulated retirement or
pension plan for the provision of retirement or pension benefits
(including disability or death benefits);
b) The account is tax-favored (i.e., contributions to the account that
would otherwise be subject to tax under the laws of Malaysia are
deductible or excluded from the gross income of the account
holder or taxed at a reduced rate, or taxation of investment
income from the account is deferred or taxed at a reduced rate);
c) Annual information reporting is required to the tax authorities in
Malaysia with respect to the account; or the account is an account
in a Broad Participation Retirement Fund that is overseen by the
Ministry of Finance of Malaysia, there are annual information
statements of its beneficiaries, which are available upon request
to the relevant tax authorities in Malaysia;
d) Withdrawals are conditioned on reaching a specified retirement
age, disability, or death, or penalties apply to withdrawals made
before such specified events; and
e) Either (i) annual contributions are limited to $50,000 or less, or
(ii) there is a maximum lifetime contribution limit to the account
of $1,000,000 or less, in each case applying the rules set forth in
Annex I for account aggregation and currency translation.
2. Non-Retirement Savings Accounts. An account maintained in Malaysia
(other than an insurance or Annuity Contract) that satisfies the
following requirements under the laws of Malaysia.
a) The account is subject to regulation as a savings vehicle for
purposes other than for retirement;
b) The account is tax-favored (i.e., contributions to the account that
would otherwise be subject to tax under the laws of Malaysia are
deductible or excluded from the gross income of the account
holder or taxed at a reduced rate, or taxation of investment
income from the account is deferred or taxed at a reduced rate);
c) Withdrawals are conditioned on meeting specific criteria related
to the purpose of the savings account (for example, the provision
of educational or medical benefits), or penalties apply to
withdrawals made before such criteria are met; and
d) Annual contributions are limited to $50,000 or less, applying the
rules set forth in Annex I for account aggregation and currency
translation.
B. Certain Term Life Insurance Contracts. A life insurance contract
maintained in Malaysia with a coverage period that will end before the
insured individual attains age 90, provided that the contract satisfies the
following requirements:
1. Periodic premiums, which do not decrease over time, are payable at
least annually during the period the contract is in existence or until the
insured attains age 90, whichever is shorter;
2. The contract has no contract value that any person can access (by
withdrawal, loan, or otherwise) without terminating the contract;
3. The amount (other than a death benefit) payable upon cancellation or
termination of the contract cannot exceed the aggregate premiums
paid for the contract, less the sum of mortality, morbidity, and expense
charges (whether or not actually imposed) for the period or periods of
the contract’s existence and any amounts paid prior to the cancellation
or termination of the contract; and
4. The contract is not held by a transferee for value.
C. Account Held By an Estate. An account maintained in Malaysia that is held
solely by an estate if the documentation for such account includes a copy of
the deceased’s will or death certificate.
D. Escrow Accounts. An account maintained in Malaysia established in
connection with any of the following:
1. A court order or judgment.
2. A sale, exchange, or lease of real or personal property, provided that
the account satisfies the following requirements:
a) The account is funded solely with a down payment, earnest
money, deposit in an amount appropriate to secure an obligation
directly related to the transaction, or a similar payment, or is
funded with a financial asset that is deposited in the account in
connection with the sale, exchange, or lease of the property;
b) The account is established and used solely to secure the
obligation of the purchaser to pay the purchase price for the
property, the seller to pay any contingent liability, or the lessor or
lessee to pay for any damages relating to the leased property as
agreed under the lease;
c) The assets of the account, including the income earned thereon,
will be paid or otherwise distributed for the benefit of the
purchaser, seller, lessor, or lessee (including to satisfy such
person’s obligation) when the property is sold, exchanged, or
surrendered, or the lease terminates;
d) The account is not a margin or similar account established in
connection with a sale or exchange of a financial asset; and
e) The account is not associated with a credit card account.
3. An obligation of a Financial Institution servicing a loan secured by real
property to set aside a portion of a payment solely to facilitate the
payment of taxes or insurance related to the real property at a later
time.
4. An obligation of a Financial Institution solely to facilitate the payment
of taxes at a later time.
E. Partner Jurisdiction Accounts. An account maintained in Malaysia and
excluded from the definition of Financial Account under an agreement
between the United States and another Partner Jurisdiction to facilitate the
implementation of FATCA, provided that such account is subject to the same
requirements and oversight under the laws of such other Partner
Jurisdiction as if such account were established in that Partner Jurisdiction
and maintained by a Partner Jurisdiction Financial Institution in that Partner
Jurisdiction.
VI. Definitions. The following additional definitions shall apply to the descriptions
above:
A. Reporting Model 1 FFI. The term Reporting Model 1 FFI means a Financial
Institution with respect to which a non-U.S. government or agency thereof
agrees to obtain and exchange information pursuant to a Model 1 IGA, other
than a Financial Institution treated as a Non-Participating Financial
Institution under the Model 1 IGA. For purposes of this definition, the term
Model 1 IGA means an arrangement between the United States or the
Treasury Department and a non-U.S. government or one or more agencies
thereof to implement FATCA through reporting by Financial Institutions to
such non-U.S. government or agency thereof, followed by automatic
exchange of such reported information with the IRS.
B. Participating FFI. The term Participating FFI means a Financial Institution
that has agreed to comply with the requirements of an FFI Agreement,
including a Financial Institution described in a Model 2 IGA that has agreed
to comply with the requirements of an FFI Agreement. The term
Participating FFI also includes a qualified intermediary branch of a
Reporting U.S. Financial Institution, unless such branch is a Reporting Model
1 FFI. For purposes of this definition, the term FFI Agreement means an
agreement that sets forth the requirements for a Financial Institution to be
treated as complying with the requirements of section 1471(b) of the U.S.
Internal Revenue Code. In addition, for purposes of this definition, the term
Model 2 IGA means an arrangement between the United States or the
Treasury Department and a non-U.S. government or one or more agencies
thereof to facilitate the implementation of FATCA through reporting by
Financial Institutions directly to the IRS in accordance with the
requirements of an FFI Agreement, supplemented by the exchange of
information between such non-U.S. government or agency thereof and the
IRS.
