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𝐒𝐄𝐁𝐈 𝐂𝐢𝐫𝐜𝐮𝐥𝐚𝐫 𝐟𝐨𝐫 𝐂𝐞𝐧𝐭𝐫𝐚𝐥𝐢𝐳𝐢𝐧𝐠 𝐅𝐀𝐓𝐂𝐀 𝐚𝐧𝐝 𝐂𝐑𝐒 𝐂𝐞𝐫𝐭𝐢𝐟𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬

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SEBI has recently issued a circular outlining the procedure and manner for centralizing certifications related to the Foreign Account Tax Compliance Act (“FATCA”) and the Common Reporting Standard (“CRS”) by intermediaries, who are Reporting Financial Institutions (“RFI”) through the KYC Registration Agencies (“KRAs”) platform. This initiative aims for ease of doing business and ensure compliance reporting.

FATCA was enacted by the USA in 2010 to obtain information on accounts held by US taxpayers in other countries. Similarly, CRS is an initiative of G-20 countries and Organisation for Economic Co-operation and Development (“OECD”) and serves a comparable purpose to FATCA.

An RFI, as defined under rule 114F(7) of the Income Tax Rules, 1962, means,— (a) a financial institution (other than a non-reporting financial institution) which is resident in India, but excludes any branch of such institution, that is located outside India; and (b) any branch, of a financial institution (other than a non-reporting financial institution) which is not resident in India, if that branch is located in India.

According to the SEBI circular, RFIs are required to upload FATCA and CRS certifications obtained from clients onto the KRAs system starting from July 01, 2024. Existing certifications acquired before this date must be uploaded by intermediaries onto the KRAs systems within a 90-day period.

The responsibility for acquiring and reporting FATCA and CRS certifications, along with related compliances, rests with the respective intermediaries. Intermediaries are required to validate the reasonableness of such certifications based on information gathered during account opening procedures, including documentation in accordance with the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. They must also promptly update self-certifications in case of any client-reported changes.
KRAs are tasked with developing systems/mechanisms in collaboration with one another and adhering to uniform internal guidelines/standards, as advised by SEBI.

A copy of the Circular is enclosed herewith and also available on the SEBI website.

Readers are welcome to share their views with Regstreet Law Advisors on info@regstreetlaw.com.

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