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.

EAI (Échange automatique d'informations) : For countries that have signed an agreement to prevent tax evasion.

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

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FATCA/EAI 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

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

Partner ->>  XPO : PATCH/api/sca/v3.0/users/{appUserId}/fatca-eai
alt Data Validated
    XPO --) Partner : Callback 44<br/>fatcaEaiStatus: OK
else Additional information required
    XPO --) Partner : Callback 44<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 : Callback 44<br/>fatcaEaiStatus:OK <br/> diligences{files, status OK}
end
Partner ->>  XPO : GET /api/v3.0/users/{appUserId}/fatca-eai
XPO --) Partner : FatcaEai {isUSPerson, taxInformation,<br/> taxIdentificationNumberStatus, vraisemblanceStatus, <br/> fatcaEaiStatus}

FATCA/EAI steps

The FatcaEai functionality consists of a 3-step process:

1. Collection of the customer's tax information
2. Validation of the consistency/likelihood of the tax information, document analysis (scope of the KYC brigade) and Fatca validation
3. Display of Fatca self-certification

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Collect Customer Tax Information`

🔗Patch Facta Eai

📘

A customer can declare the maximum of three tax countries along with their respective tax identification numbers.

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.

To follow the evolution of this entire Fatca process, the field fatcaEaiStatus is updated.

The field fatcaEaiStatus can have 3 possibles values:

• enum 0 = NOK,
• enum 1 = Pending,
• enum 2 = OK

flowchart TD
    A["FatcaStatut == NOK"] --> B["Any diligence uploaded ?"]
    B -- Yes --> C["FatcaEaiStatut == Pending"]
    B -- NO --> A
    C --> n2["Any Diligence to be reviewed Manualy ?"]
    n2 -- Yes --> C
    n2 -- No --> n3["Any Diligence Refused ?"]
    n3 -- Yes --> A
    n3 -- No --> n4["FatcaEaiStatut== OK"]
    n5["Small Circle"] --> A

    A@{ shape: rounded}
    B@{ shape: diam}
    C@{ shape: rounded}
    n2@{ shape: diam}
    n3@{ shape: diam}
    n5@{ shape: sm-circ}

FatcaEaiStatus OK

If the user is not American, and all the checks are good, then the status is validated.

🔗Callback #44 is sent with the fatcaEaiStatus OK.

The 🔗 Get FATCA EAI allows you to return:

• taxIdentificationNumberStatus OK
• vraisemblanceStatus OK
• fatcaEaiStatus OK

FatcaEaiStatus NOK

Otherwise, 🔗Callback #44describes the expected document(s).
The user needs to upload documents, using a dedicated endpoint 🔗 FATCA EAI Documents
Important to mention that the vraissemblance value does not change, even if FatcaEaiStatus changes for OK.

The diligences have 3 statuts:

• Validated
• To_Review_Manually
• Refused

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

❗️

In the EAI process, when an "other document" is requested, it is necessary to ask the customer to justify the difference between its country of residence and the country in which it pays tax.

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 / EAI 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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APIs, callbacks and technical items

🔗Modification FATCA EAI

The strong authentication is mandatory for Agent Partners.

🔗Compliance status

🔗FATCA EAI certification

🔗FATCA EAI documents

🔗Callback #44

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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Appendix: Tin required

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