To fight against tax evasion, the government has asked financial institutions to implement solutions to collect and verify their customers' tax information.

This is the role of FatacaEai Feature, which consists of verifying FATCA information and related documents at the onboarding phase, analyzing the FATCA information versus the customer banking usage during the relationship and finally reporting to tax institutions.

The FATCA/EAI status is part of the user status.

Definitions

FATCA (Foreign Account Tax Compliance Act) is a mandatory reporting resulting from a US law to combat tax evasion by US taxpayers.

CRS (Common Reporting Standard) : For countries that have signed an agreement to prevent tax evasion.

🔗https://www.oecd.org/tax/automaticexchange.htm

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FATCA/CRS sequence diagram

sequenceDiagram
Title: Fatca EAI
autonumber
Actor User
participant Partner
participant XPO

Note over User, XPO: User creation
Note over User, XPO: KYC demand
Note over User, XPO: Wallet_initialization for Strong Customer Authentication

Note over User, XPO: Report the information

User ->> Partner : Gathering key information<br/> isUSPerson <br/> taxInformation
Partner ->>  User : Strong authentication required
User ->> Partner: Strong authentication validated

Partner ->>  XPO : PATCH/api/sca/v4.0/fatca-crs

Note over User, XPO: Add documents if necessary
alt Data Validated
    XPO --) Partner : Webhook FatcaCrsCreatedOrUpdated <br/>status: OK
else Additional information required
    XPO --) Partner : Webhook FatcaCrsCreatedOrUpdated <br/>fatcaEaiStatus:NOK <br/> diligences{files, status}
    Partner --) User: Display expected documents
    User --) Partner: Upload expected documents
    Partner ->>  XPO : POST /api/v2.0/users/{appUserId}/fatca/attachments
    XPO --) Partner : webhook FatcaCrsAttachmentCreatedOrUpdated <br/>fatcaEaiStatus:OK <br/> diligences{files, status OK}
    XPO --) Partner : webhook FatcaCrsCreatedOrUpdated
    end
    
 Note over User, XPO: generate the self-certification
    XPO --) Partner : webhook FatcaCrsSelfCertificationCreatedOrUpdated

 Note over User, XPO: Download the self-certification
  User --) Partner: document signed
  Partner --) XPO: POST/fatca-crs-self-certification/{selfCertificationId}/sign
	XPO --) Partner: webhook FatcaCrsSelfCertificationCreatedOrUpdated


Note over User, XPO: Sign the self-certification
  User --) Partner: download self-certification
  Partner --) XPO: GET/fatca-crs-self-certification/{selfCertificationId}/download
	XPO --) Partner: webhook FatcaCrsSelfCertificationCreatedOrUpdated

Note over User, XPO: fatca crs finalised
	XPO --) Partner : webhook FatcaCrsCreatedOrUpdated

FATCA/CRS steps

The Fatca crs functionality consists of rhe following steps:

FATCA/CRS statuses

3 levels and 3 lifecycles.

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Collect Customer Tax Information

At this stage, we perform some basic checks to ensure that the mandatory fields are filled in and that the TIN is correct according to the format (combination of numbers, letters, and characters) given by the tax country

For each TIN provided by the customer, an action takes place to verify its format and coherence considering the tax country associated to it.

The TIN is optional if:

• Taxcountry = FR
• Taxcountry = Country where TIN is optional (see appendix)
• Taxcountry is not EAI member
  For all other cases, the TIN is mandator

Find the list of TINs here: 🔗http9s://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-identification-numbers/

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FATCA/EAI status diagram: Tax Information Consistency / Vraisemblance

The first step is to check whether the user has declared himself to be an American. If so, documents are requested.

The second step includes the **consistency validation** among client’s identity information, his currently country of residence and tax countries inserted. It’s also called Vraissemblance (French for likelihood, apperance of truth).

A synchronous response of the API PATCH fatcaEai allows to see the results of these controls and to know what the required document is.

When the controls fail, the customer will need to provide document(s) to justify and support his tax declaration :

• W9 = required when the customer tax declaration is related with USA
• W8-Ben = required to declare that an USA citizen or resident is not an USA contributor
• Other documentation = required to justify and support his tax declaration

It’s important to mention that “Vraissemblance checks” do not verify the information inside any document, it is done by an agent.

W8 or W9 as FATCA attachments

If W8 or W9 are expected, here are the templates:

• W8:

  • 🔗https://www.irs.gov/forms-pubs/about-form-w-8-ben

• W9:

  • 🔗 https://www.irs.gov/forms-pubs/about-form-w-9

Other Document for EAI

This explanation are given in a text document which is sent by API to Xpollens.

Once the explanation has been received, it is studied by the Xpollens Middle Office team, who will indicate which document is required.

In most cases, an employee will be asked to provide proof of tax assessment, while a student will be asked to provide a school leaving certificate.

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Display FATCA / CRS certification

The partner must make this document available for the customer at any time once the onboarding path has been confirmed.

This certification is not archived in Xpollens DB, it is generated everytime a partner asks for it.

🔗FATCA EAI certification

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Display FATCA / CRS certification

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APIs, callbacks and technical items

Logo

A partner logo is required for the self-certification file. It must have the following format: 100px x 372px (19,3mm x 74,2mm)

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FAQ

French DROM COM

What must be declared for french DROM COM ?

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How to test FATCA/EAI

Let see some examples:

In pre-production, it is necessary to synchronise with the customer integration manager for end-to-end tests, with sandbox review carried out on request.

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