FATCA G-5 Model Intergovernmental Information Sharing Agreements Released, with Substantial Benefits for Insurance Company FFIs (Including Reduced Due Diligence Burdens)


On July 26, 2012, the Treasury Department released two versions of a model intergovernmental agreement (model IGA) for government-to-government information sharing under the Foreign Account Tax Compliance Act (FATCA). One version, the reciprocal version, contains reciprocal U.S. information sharing provisions. The second non-reciprocal version does not impose any information sharing requirements on the United States. Both versions of the model IGA provide a number of substantial benefits for foreign financial institutions (FFIs) resident in a country that enters into an IGA with the United States (FATCA partner jurisdictions), thereby demonstrating Treasury’s increased understanding of the insurance business and its responsiveness to the detailed comments submitted by international insurance trade associations.

The model IGAs confirm that insurance companies that do not issue cash value life insurance contracts or annuity contracts are not FFIs, but rather are non-financial foreign entities (NFFEs). Only passive NFFEs are required to identify and report their substantial U.S. owners, if any. In this regard, the model IGA provides that an NFFE will be considered active if...

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