Agreement between the Government of the United States of America and the Government 

of the Republic of Honduras to Improve International Tax Compliance and to Implement 

FATCA

Whereas, the Government of the United States of America and the Government of the Republic 

of Honduras (each, a “Party,” and together, the “Parties”) desire to conclude an agreement to 

improve international tax compliance through mutual assistance in tax matters based on an 

effective infrastructure for the automatic exchange of information;

Whereas, Article 4 of the Agreement between the Government of the United States of America 

and the Government of the Republic of Honduras for the Exchange of Information with Respect 

to Taxes, done at Washington D.C. on September 27, 1990 (the “TIEA”), authorizes the 

exchange of information for tax purposes, including on an automatic basis;

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 the Republic of Honduras is supportive of the underlying policy 

goal of FATCA to improve tax compliance;

Whereas, the Government of the Republic of Honduras designated the Honduran National 

Banking and Insurance Commission (CNBS) as the Coordinating Institution for performing 

certain actions involving the Honduran financial system related to FATCA, via Presidential 

Decree 116-DP-2013;

Whereas, FATCA has raised a number of issues, including that the Honduran financial 

institutions may not be able to comply with certain aspects of FATCA due to domestic legal 

impediments;

Whereas, the Government of the United States of America collects information regarding certain 

accounts maintained by U.S. financial institutions held by residents of the Republic of Honduras

and is committed to exchanging such information with the Government of the Republic of

Honduras and pursuing equivalent levels of exchange, provided that the appropriate safeguards 

and infrastructure for an effective exchange relationship are in place;

Whereas, the Parties are committed to working together over the longer term towards achieving 

common reporting and due diligence standards for financial institutions;

Whereas, the Government of the United States of America acknowledges the need to coordinate 

the reporting obligations under FATCA with other U.S. tax reporting obligations of the 

Honduran financial institutions to avoid duplicative reporting;

Whereas, an intergovernmental approach to FATCA implementation would address legal 

impediments and reduce burdens for Honduran financial institutions;
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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 reciprocal 

automatic exchange pursuant to the TIEA, and subject to the confidentiality and other protections 

provided for therein, including the provisions limiting the use of the information exchanged 

under the TIEA; 

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 “Honduras” means the Republic of Honduras.

e) The term “CNBS” means the Honduran National Banking and Insurance Commission.

f) 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.

g) 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 Honduras, the Secretary of State in the office of the Minister of 

Finance and Public Credit or his legal alternate.

h) The term “Financial Institution” means a Custodial Institution, a Depository 

Institution, an Investment Entity, or a Specified Insurance Company.

i) The term “Custodial Institution” means any Entity that holds, as a substantial portion 

of its business, financial assets for the account of others. 
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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.

j) The term “Depository Institution” means any Entity that accepts deposits in the 

ordinary course of a banking or similar business. 

k) 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.

l) 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.

m) The term “Honduran Financial Institution” means (i) any Financial Institution 

resident in Honduras, but excluding any branch of such Financial Institution that is 

located outside Honduras, and (ii) any branch of a Financial Institution not resident in

Honduras, if such branch is located in Honduras. 

n) 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.

o) The term “Reporting Financial Institution” means a Reporting Honduran Financial 

Institution or a Reporting U.S. Financial Institution, as the context requires.
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p) The term “Reporting Honduran Financial Institution” means any Honduran

Financial Institution that is not a Non-Reporting Honduran Financial Institution.

q) The term “Reporting U.S. Financial Institution” means (i) any Financial Institution 

that is resident in the United States, but excluding any branch of such Financial 

Institution that is located outside the United States, and (ii) any branch of a Financial 

Institution not resident in the United States, if such branch is located in the United 

States, provided that the Financial Institution or branch has control, receipt, or custody 

of income with respect to which information is required to be exchanged under 

subparagraph (2)(b) of Article 2 of this Agreement.

r) The term “Non-Reporting Honduran Financial Institution” means any Honduran

Financial Institution, or other Entity resident in Honduras that is described in Annex II 

as a Non-Reporting Honduran Financial Institution or that otherwise qualifies as a 

deemed-compliant FFI or an exempt beneficial owner under relevant U.S. Treasury 

Regulations.

s) The term “Nonparticipating Financial Institution” means a nonparticipating FFI, as 

that term is defined in relevant U.S. Treasury Regulations, but does not include a 

Honduran Financial Institution or other Partner Jurisdiction Financial Institution other 

than a Financial Institution treated as a Nonparticipating Financial Institution pursuant 

to subparagraph 2(b) of Article 5 of this Agreement or the corresponding provision in 

an agreement between the United States and a Partner Jurisdiction.

t) 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(s)(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 noninvestment-linked, 

nontransferable 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.
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Notwithstanding the foregoing, the term “Financial Account” does not include 

any account that is excluded from the definition of Financial Account in Annex 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(s), 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. 

u) 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. 

v) 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 nonfinancial index, 

a notional principal contract, an Insurance Contract or Annuity Contract, and any 

option or other derivative instrument).

w) 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 distribution or may receive, directly or indirectly, a discretionary 

distribution from the trust. 

x) 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.
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y) 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. 

z) 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.

aa) 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.

bb) The term “Reportable Account” means a U.S. Reportable Account or a Honduran

Reportable Account, as the context requires.

cc) The term “Honduran Reportable Account” means a Financial Account maintained 

by a Reporting U.S. Financial Institution if: (i) in the case of a Depository Account, 

the account is held by an individual resident in Honduras and more than $10 of 

interest is paid to such account in any given calendar year; or (ii) in the case of a 

Financial Account other than a Depository Account, the Account Holder is a resident 

of Honduras, including an Entity that certifies that it is resident in Honduras for tax 

purposes, with respect to which U.S. source income that is subject to reporting under 

chapter 3 of subtitle A or chapter 61 of subtitle F of the U.S. Internal Revenue Code 

is paid or credited.
7

dd) The term “U.S. Reportable Account” means a Financial Account maintained by a 

Reporting Honduran Financial Institution and held by one or more Specified U.S. 

Persons or by a Non-U.S. Entity with one or more Controlling 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.

ee) 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.

ff) 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(ee) shall be 

interpreted in accordance with the U.S. Internal Revenue Code.

gg) 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. 
8

Securities and 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(b) of the U.S. Internal Revenue Code. 

hh) The term “Entity” means a legal person or a legal arrangement such as a trust.

ii) The term “Non-U.S. Entity” means an Entity that is not a U.S. Person. 

jj) 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. 

kk) 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, Honduras 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. 

ll) The term “U.S. TIN” means a U.S. federal taxpayer identifying number. 

mm) The term “Honduran TIN” means a Honduran taxpayer identifying number, 

Registro Tributario Nacional (“RTN”). 

nn) 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. 

2. Any term not otherwise defined in this Agreement shall, unless the context otherwise requires 

or the Parties 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 
9

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 Reportable Accounts

1. Subject to the provisions of Article 3 of this Agreement, each Party shall obtain the 

information specified in paragraph 2 of this Article with respect to all Reportable Accounts and 

shall annually exchange this information with the other Party on an automatic basis pursuant to 

the provisions of Article 4 of the TIEA. 

2. The information to be obtained and exchanged is:

a) In the case of Honduras with respect to each U.S. Reportable Account of each 

Reporting Honduran Financial Institution:

(1) 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;

(2) the account number (or functional equivalent in the absence of an account 

number);

(3) the name and identifying number of the Reporting Honduran Financial 

Institution;

(4) the average monthly account balance or value (including, in the case of a Cash 

Value Insurance Contract or Annuity Contract, the Cash Value or surrender 

value) during the relevant calendar year or other appropriate reporting period 

or, if the account was closed during such year, the average monthly balance 

for the calendar year up to the time of closure; 

(5) in the case of any Custodial Account: 

(A) 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 with respect to the account) during the calendar year or 

other appropriate reporting period; and 

(B) 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 Honduran
10

Financial Institution acted as a custodian, broker, nominee, or 

otherwise as an agent for the Account Holder; 

(6) 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

(7) in the case of any account not described in subparagraph 2(a)(5) or 2(a)(6) 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 Honduran 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.

b) In the case of the United States, with respect to each Honduran Reportable Account of 

each Reporting U.S. Financial Institution:

(1) the name, address, and Honduran TIN of any person that is a resident of 

Honduras and is an Account Holder of the account; 

(2) the account number (or the functional equivalent in the absence of an account 

number); 

(3) the name and identifying number of the Reporting U.S. Financial Institution;

(4) the gross amount of interest paid on a Depository Account;

(5) the gross amount of U.S. source dividends paid or credited to the account; and 

(6) the gross amount of other U.S. source income paid or credited to the account, 

to the extent subject to reporting under chapter 3 of subtitle A or chapter 61 of 

subtitle F of the U.S. Internal Revenue Code.

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 Honduras, and the amount and 

characterization of payments made with respect to a Honduran Reportable Account may be 

determined in accordance with principles of U.S. federal income tax law. 

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.
11

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) In the case of Honduras:

(1) the information to be obtained and exchanged with respect to 2014 is only the 

information described in subparagraphs 2(a)(1) through 2(a)(4) of Article 2 of 

this Agreement; 

(2) the information to be obtained and exchanged with respect to 2015 is the 

information described in subparagraphs 2(a)(1) through 2(a)(7) of Article 2 of 

this Agreement, except for gross proceeds described in subparagraph 

2(a)(5)(B) of Article 2 of this Agreement; and

(3) the information to be obtained and exchanged with respect to 2016 and 

subsequent years is the information described in subparagraphs 2(a)(1) 

through 2(a)(7) of Article 2 of this Agreement;

b) b) In the case of the United States, the information to be obtained and exchanged with 

respect to 2014 and subsequent years is all of the information identified in 

subparagraph 2(b) of Article 2 of this Agreement. 

4. Notwithstanding paragraph 3 of this Article, with respect to each Reportable Account that is 

maintained by a Reporting Financial Institution as of June 30, 2014, and subject to paragraph 4 

of Article 6 of this Agreement, the Parties are not required to obtain and include in the 

exchanged information the Honduran TIN or the U.S. TIN, as applicable, of any relevant person 

if such taxpayer identifying number is not in the records of the Reporting Financial Institution. In 

such a case, the Parties shall obtain and include in the exchanged information the date of birth of 

the relevant person, if the Reporting 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 within nine months after the end of the calendar year to which the 

information relates. 

6. The Parties shall enter into an agreement or arrangement under the mutual agreement 

procedure provided for in Article 5 of the TIEA, 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.
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7. All information exchanged shall be subject to the confidentiality and other protections 

provided for in the TIEA, including the provisions limiting the use of the information exchanged.

8. Following entry into force of this Agreement, each Competent Authority shall provide written 

notification to the other Competent Authority when it is satisfied that the jurisdiction of the other 

Competent Authority has in place (i) appropriate safeguards to ensure that the information 

received pursuant to this Agreement shall remain confidential and be used solely for tax 

purposes, and (ii) the infrastructure for an effective exchange relationship (including established 

processes for ensuring timely, accurate, and confidential information exchanges, effective and 

reliable communications, and demonstrated capabilities to promptly resolve questions and 

concerns about exchanges or requests for exchanges and to administer the provisions of Article 5 

of this Agreement). The Competent Authorities shall endeavor in good faith to meet, prior to 

September 2015, to establish that each jurisdiction has such safeguards and infrastructure in 

place.

9. The obligations of the Parties to obtain and exchange information under Article 2 of this 

Agreement shall take effect on the date of the later of the written notifications described in 

paragraph 8 of this Article. Notwithstanding the foregoing, if the Honduran Competent 

Authority is satisfied that the United States has the safeguards and infrastructure described in 

paragraph 8 of this Article in place, but additional time is necessary for the U.S. Competent 

Authority to establish that Honduras has such safeguards and infrastructure in place, the 

obligation of Honduras to obtain and exchange information under Article 2 of this Agreement 

shall take effect on the date of the written notification provided by the Honduran Competent 

Authority to the U.S. Competent Authority pursuant to paragraph 8 of this Article.

10. This Agreement shall terminate on September 30, 2015, if Article 2 of this Agreement is not 

in effect for either Party pursuant to paragraph 9 of this Article by that date.

Article 4

Application of FATCA to Honduran Financial Institutions

1. Treatment of Reporting Honduran Financial Institutions. Each Reporting

Honduran Financial Institution shall be treated as complying with, and not subject to 

withholding under, section 1471 of the U.S. Internal Revenue Code if Honduras complies with 

its obligations under Articles 2 and 3 of this Agreement with respect to such Reporting

Honduran Financial Institution, and the Reporting Honduran Financial Institution:

a) identifies U.S. Reportable Accounts and reports annually to CNBS the information 

required to be reported in subparagraph 2(a) 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 CNBS the name of each 

Nonparticipating Financial Institution to which it has made payments and the 

aggregate amount of such payments;
13

c) complies with the applicable registration requirements on the IRS FATCA registration 

website;

d) to the extent that a Reporting Honduran 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 Nonparticipating Financial Institution; and 

e) in the case of a Reporting Honduran 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 

Nonparticipating Financial Institution, the Reporting Honduran 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.

Notwithstanding the foregoing, a Reporting Honduran 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 Honduran Financial 

Institution is treated by the IRS as a Nonparticipating Financial Institution pursuant to 

subparagraph 2(b) of Article 5 of this Agreement.

2. Suspension of Rules Relating to Recalcitrant Accounts. The United States shall not require 

a Reporting Honduran 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 subparagraph 2(a) 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 Honduran retirement plans. The United States shall treat as deemedcompliant FFIs or exempt beneficial owners, as appropriate, for purposes of sections 1471 and 

1472 of the U.S. Internal Revenue Code, Honduran retirement plans described in Annex II. For 

this purpose, a Honduran retirement plan includes an Entity established or located in, and 

regulated by, Honduras, 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 

Honduras 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 Honduran Financial Institution as a 
14

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 Nonparticipating

Financial Institutions. If a Honduran 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 Nonparticipating Financial Institution solely due to the expiration of the 

transitional rule for limited FFIs and limited branches under relevant U.S. Treasury Regulations, 

such Honduran 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:

a) the Honduran Financial Institution treats each such Related Entity or branch as a 

separate Nonparticipating 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 Nonparticipating 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 Nonparticipating 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 Honduran 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) Honduras 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;

b) Honduras 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; 
15

c) the United States shall not be obligated to obtain and exchange information with respect to 

a calendar year that is prior to the first calendar year with respect to which Honduras is 

required to obtain and exchange information; and 

d) the United States shall not be obligated to begin exchanging information prior to the date 

by which Honduras is required to begin exchanging information. 

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, Honduras may use, and may permit Honduran 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. 

Article 5

Collaboration on Compliance and Enforcement

1. Minor and Administrative Errors. A Party shall notify the other Party when the firstmentioned Party 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. Such other Party shall apply its domestic law (including applicable penalties) to 

obtain corrected and/or complete information or to resolve other infringements of this 

Agreement. 

2. Significant Non-Compliance.

a) A Party shall notify the other Party when the first-mentioned Party has determined that 

there is significant non-compliance with the obligations under this Agreement with 

respect to a Reporting Financial Institution in the other jurisdiction. Such other Party 

shall apply its domestic law (including applicable penalties) to address the significant 

non-compliance described in the notice. 

b) If, in the case of a Reporting Honduran Financial Institution, such enforcement actions 

do not resolve the non-compliance within a period of 18 months after notification of 

significant non-compliance is first provided, the United States shall treat the Reporting 

Honduran Financial Institution as a Nonparticipating Financial Institution pursuant to 

this subparagraph 2(b).

3. Reliance on Third Party Service Providers. Each Party may allow Reporting Financial 

Institutions to use third party service providers to fulfill the obligations imposed on such 

Reporting Financial Institutions by a Party, as contemplated in this Agreement, but these 

obligations shall remain the responsibility of the Reporting Financial Institutions.

4. Prevention of Avoidance. The Parties shall implement as necessary requirements to prevent 

Financial Institutions from adopting practices intended to circumvent the reporting required 

under this Agreement.
16

Article 6

Mutual Commitment to Continue to Enhance the Effectiveness of Information Exchange 

and Transparency

1. Reciprocity. The Government of the United States acknowledges the need to achieve 

equivalent levels of reciprocal automatic information exchange with Honduras. The Government 

of the United States is committed to further improve transparency and enhance the exchange 

relationship with Honduras by pursuing the adoption of regulations and advocating and 

supporting relevant legislation to achieve such equivalent levels of reciprocal automatic 

information exchange.

2. 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. 

3. Development of Common Reporting and Exchange Model. The Parties are committed to 

working with Partner Jurisdictions and the Organisation for Economic Co-operation and 

Development on adapting the terms of this Agreement and other agreements between the United 

States and Partner Jurisdictions to a common model for automatic exchange of information, 

including the development of reporting and due diligence standards for financial institutions.

4. Documentation of Accounts Maintained as of June 30, 2014. With respect to Reportable 

Accounts maintained by a Reporting Financial Institution as of June 30, 2014:

a) The United States commits to establish, by January 1, 2017, for reporting with respect 

to 2017 and subsequent years, rules requiring Reporting U.S. Financial Institutions to 

obtain and report the Honduran TIN of each Account Holder of a Honduran

Reportable Account as required pursuant to subparagraph 2(b)(1) of Article 2 of this 

Agreement; and

b) Honduras commits to establish, by January 1, 2017, for reporting with respect to 2017 

and subsequent years, rules requiring Reporting Honduran Financial Institutions to 

obtain the U.S. TIN of each Specified U.S. Person as required pursuant to 

subparagraph 2(a)(1) of Article 2 of this Agreement.

Article 7 

Consistency in the Application of FATCA to Partner Jurisdictions 

1. Honduras 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 Honduran 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 Honduras described in 

Articles 2 and 3 of this Agreement, and subject to the same terms and conditions as described 

therein and in Articles 5 through 9 of this Agreement. 
17

2. The United States shall notify Honduras 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 Honduras declines the application thereof. 

Article 8 

Consultations and Amendments 

1. In case any difficulties in the implementation of this Agreement arise, either Party may 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 10 of this Agreement. 

Article 9 

Annexes 

The Annexes form an integral part of this Agreement. 

Article 10

Term of Agreement

1. This Agreement shall enter into force on the date of Honduras’ written notification to the 

United States that Honduras 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.

The Parties shall, prior to December 31, 2016, consult in good faith to amend this Agreement as 

necessary to reflect progress on the commitments set forth in Article 6 of this Agreement.

In witness whereof, the undersigned, being duly authorized thereto by their respective 

Governments, have signed this Agreement.

Done at _____, this ____ day of _____, 20__, in duplicate, in the English language. A Spanish

language text shall be prepared which shall be considered equally authentic upon an exchange of 

diplomatic notes between the Parties confirming its conformity with the English language text. 

FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF

THE UNITED STATES OF AMERICA: THE REPUBLIC OF HONDURAS:
18

ANNEX I 

DUE DILIGENCE OBLIGATIONS FOR IDENTIFYING AND REPORTING ON U.S. 

REPORTABLE ACCOUNTS AND ON PAYMENTS TO CERTAIN 

NONPARTICIPATING FINANCIAL INSTITUTIONS 

I. General. 

A. Honduras shall require that Reporting Honduran Financial Institutions apply the due 

diligence procedures contained in this Annex I to identify U.S. Reportable Accounts and 

accounts held by Nonparticipating 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, 

Honduras may permit Reporting Honduran 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 Nonparticipating Financial 

Institution. Honduras may permit Reporting Honduran 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). 
19

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 Honduran 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 Honduras 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 Honduras 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 Honduras

requires reporting or withholding with respect to insurance products held by 

residents of Honduras). 

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 Honduran Financial Institution

must review electronically searchable data maintained by the Reporting Honduran 

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; 
20

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 Honduran 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 Honduran 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 Honduran 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 Honduran 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 
21

(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 

Honduran 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 Honduran 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 Honduran 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. 
22

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 Honduran 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 orAny Subsequent Year (“High Value Accounts”).

1. Electronic Record Search. The Reporting Honduran Financial Institution

must review electronically searchable data maintained by the Reporting Honduran 

Financial Institution for any of the U.S. indicia described in subparagraph B(1) of 

this section. 

2. Paper Record Search. If the Reporting Honduran 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 Honduran 

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 Honduran 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 Honduran 

Financial Institution pursuant to AML/KYC Procedures or for other 

regulatory purposes; 
23

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 

Honduran Financial Institution is not required to perform the paper record search 

described in subparagraph D(2) of this section if the Reporting Honduran 

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 Honduran Financial Institution; 

c) The Account Holder’s telephone number(s) currently on file, if any, 

with the Reporting Honduran 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 Honduran 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 Honduran 

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. 
24

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 Honduran 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 Honduran 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 

Honduran 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 Honduran 

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 Honduran 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 Honduran 

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 Honduran Financial Institution applies the enhanced review 

procedures described in paragraph D of this section to a High Value Account, the 

Reporting Honduran Financial Institution is not required to re-apply such 
25

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 Honduran 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 Honduran 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 Honduran 

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 Honduran 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 Honduran 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 Honduras

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 
26

the end of the calendar year in which the account ceases to be described in paragraph A 

of this section), the Reporting Honduran Financial Institution must obtain a selfcertification, which may be part of the account opening documentation, that allows the 

Reporting Honduran 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 Honduran 

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 Honduran 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 Honduran Financial Institution to know, or have reason 

to know, that the original self-certification is incorrect or unreliable, the Reporting 

Honduran 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 Honduran 

Financial Institution is unable to obtain a valid self-certification, the Reporting 

Honduran 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 Nonparticipating 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 Honduran 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 Honduras 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. 
27

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 Nonparticipating 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 CNBS. 

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 Honduran 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 Nonparticipating 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 Honduran 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 Honduran 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. 
28

3. Determine Whether a Financial Institution Is a Nonparticipating 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 Honduran 

Financial Institution may determine that the Account Holder is a 

Honduran Financial Institution or other Partner Jurisdiction Financial 

Institution if the Reporting Honduran 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 Honduran 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 Honduran Financial Institution or other 

Partner Jurisdiction Financial Institution treated by the IRS as a 

Nonparticipating 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 Honduran Financial Institution or other 

Partner Jurisdiction Financial Institution, then the Reporting Honduran 

Financial Institution must treat the Account Holder as a Nonparticipating 

Financial Institution payments to which are reportable under subparagraph 

1(b) of Article 4 of the Agreement, unless the Reporting Honduran 

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 deemedcompliant 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 

Honduran 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 Honduran Financial 
29

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 Honduran 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 Honduran Financial Institution must obtain a selfcertification (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 Honduran 

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 W9, 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 Honduran Financial Institution to know, or 
30

have reason to know, that the self-certification or other documentation associated 

with an account is incorrect or unreliable, the Reporting Honduran 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 Nonparticipating 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 Honduran 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 Honduras 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 Honduran 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 Honduran Financial Institution must determine 

whether the Account Holder is: (i) a Specified U.S. Person; (ii) a Honduran 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 Honduran Financial 

Institution may determine that the Account Holder is an Active NFFE, a 

Honduran Financial Institution, or other Partner Jurisdiction Financial Institution 

if the Reporting Honduran 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 Honduran Financial Institution, as 

applicable. 

2. If the Account Holder is a Honduran Financial Institution or other Partner 

Jurisdiction Financial Institution treated by the IRS as a Nonparticipating 

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 Honduran 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: 
31

a) If the Account Holder is a Specified U.S. Person, the Reporting 

Honduran Financial Institution must treat the account as a U.S. Reportable 

Account. 

b) If the Account Holder is a Passive NFFE, the Reporting Honduran 

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 Honduran 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 Honduran 

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 Nonparticipating Financial Institution 

(including a Honduran Financial Institution or other Partner Jurisdiction 

Financial Institution treated by the IRS as a Nonparticipating 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 

Honduran Financial Institution may not rely on a self-certification or documentary 

evidence if the Reporting Honduran 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 Honduran Financial Institution pursuant 

to the anti-money laundering or similar requirements of Honduras to which 

such Reporting Honduran 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 
32

B(4)(j) of this section, and also includes any Non-U.S. Entity that is 

established in Honduras 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 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; 

e) 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 NFFE shall not qualify for this status if the NFFE 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; 

f) 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; 
33

g) 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; 

h) 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; 

i) The NFFE is an “excepted NFFE” as described in relevant U.S. 

Treasury Regulations; or

j) 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. 
34

5. Preexisting Account. A “Preexisting Account” means a Financial Account maintained by 

a Reporting 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 Honduran Financial Institution is required to aggregate all Financial 

Accounts maintained by the Reporting Honduran Financial Institution, or by a 

Related Entity, but only to the extent that the Reporting Honduran 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 Honduran 

Financial Institution is required to take into account all Financial Accounts that 

are maintained by the Reporting Honduran Financial Institution, or by a Related 

Entity, but only to the extent that the Reporting Honduran 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 Honduran 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 Honduran 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 Honduran 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: 
35

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 antimoney 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 Honduran 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 

Honduran Financial Institution has actual knowledge, or reason to know, that the 

beneficiary is a Specified U.S. Person. A Reporting Honduran 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 Honduran 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 Honduran Financial Institution has actual 

knowledge, or reason to know, that the beneficiary is a Specified U.S. Person, the 

Reporting Honduran 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, Honduras may permit Reporting Honduran 

Financial Institutions to rely on due diligence procedures performed by third parties, to 

the extent provided in relevant U.S. Treasury Regulations.
36

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 Honduras 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 Honduran 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 Honduras, any political subdivision of

Honduras (which, for the avoidance of doubt, includes a state, province, county, or

municipality), or any wholly owned agency or instrumentality of Honduras or any

one or more of the foregoing (each, a “Honduran Governmental Entity”). This 

category is comprised of the integral parts, controlled entities, and political 

subdivisions of Honduras.

1. An integral part of Honduras means any person, organization, agency, bureau, 

fund, instrumentality, or other body, however designated, that constitutes a

governing authority of Honduras. The net earnings of the governing authority

must be credited to its own account or to other accounts of Honduras, 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.
37

2. A controlled entity means an Entity that is separate in form from Honduras or 

that otherwise constitutes a separate juridical entity, provided that:

a) The Entity is wholly owned and controlled by one or more Honduran

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 Honduran 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 Honduran Governmental Entities 

upon dissolution.

3. Income does not inure to the benefit of private personsif 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 agreement with 

Honduras; 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 Honduras itself, issuing instruments 

intended to circulate as currency. Such an institution may include an instrumentality 

that is separate from the government of Honduras, whether or not owned in whole 

or in part by Honduras.

II. Funds that Qualify as Exempt Beneficial Owners. The following Entities shall be

treated as Non-Reporting Honduran 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 Honduras to 

provide retirement, disability, or death benefits, or any combination thereof, to 

beneficiaries that are current or former employees (or persons designated by such 
38

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 provides annual information reporting

about its beneficiaries to CNBS; and

3. Satisfies at least one of the following requirements:

a) The fund is generally exempt from tax in Honduras on investment income 

under the laws of Honduras 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 D 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 D 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.

B. Narrow Participation Retirement Fund. A fund established in Honduras to 

provide retirement, disability, or death benefits 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:

1. The fund has fewer than 50 participants;

2. The fund is sponsored by one or more employers that are not Investment 
39

Entities or Passive NFFEs;

3. The employee and employer contributions to the fund (other than transfers of

assets from treaty-qualified retirement funds described in paragraph A of this 

section or retirement and pension accounts described in subparagraph A(1) of

section V of this Annex II) are limited by reference to earned income and 

compensation of the employee, respectively;

4. Participants that are not residents of Honduras are not entitled to more than 20 

percent of the fund’s assets; and

5. The fund is subject to government regulation and provides annual 

information reporting about its beneficiaries to CNBS.

C. Pension Fund of an Exempt Beneficial Owner. A fund established in Honduras

by an exempt beneficial owner to provide retirement, disability, or death benefits to 

beneficiaries or participants that are current or former employees of the exempt 

beneficial owner (or persons designated by such employees), or that are not current 

or former employees, if the benefits provided to such beneficiaries or participants 

are in consideration of personal services performed for the exempt beneficial owner.

D. Investment Entity Wholly Owned by Exempt Beneficial Owners. An Entity that 

is a Honduran Financial Institution solely because it is an Investment Entity, 

provided that each direct holder of an Equity Interest in the Entity is an exempt 

beneficial owner, and each direct holder of a debt interest in such Entity is either a

Depository Institution (with respect to a loan made to such Entity) or an exempt 

beneficial owner.

III. Small or Limited Scope Financial Institutions that Qualify as Deemed-Compliant

FFIs.

The following Financial Institutions are Non-Reporting Honduran 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 Honduras;
40

2. The Financial Institution must have no fixed place of business outside of

Honduras. 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 

Honduras. For this purpose, a Financial Institution shall not be considered to 

have solicited customers or Account Holders outside Honduras 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 Honduras

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 Honduras 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 Honduras’ 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 Honduras;

6. Beginning on or before July 1, 2014, 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

Nonparticipating 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 Honduras (including a U.S. Person that was a

resident of Honduras when the Financial Account was opened but 

subsequently ceases to be a resident of Honduras) or any Passive NFFE with 

Controlling Persons who are U.S. residents or U.S. citizens who are not 

residents of Honduras;

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 Honduras or by a Passive 
41

NFFE with Controlling Persons who are U.S. residents or U.S. citizens who are

not residents of Honduras is identified, the Financial Institution must report 

such Financial Account as would be required if the Financial Institution were a

Reporting Honduran 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 Honduras 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 Nonparticipating Financial Institution, and must 

report such Financial Account as would be required if the Financial Institution 

were a Reporting Honduran 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 Honduras and, with the exception of any 

Related Entity that is a retirement fund described in paragraphs A through D 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 Honduras.

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 Honduras 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 
42

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 Honduras, 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 D 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 Honduran 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 Honduran 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. Beginning on or before July 1, 2014, 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
43

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 NonReporting Honduran 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 Honduras 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 Honduras 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 corporation1

organized under the

laws of Honduras that is not a qualified intermediary, withholding foreign 

partnership, or withholding foreign trust pursuant to relevant U.S. Treasury 

 

4 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.
44

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:

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, 

2015 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 Honduran 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 Honduran Financial Institution 

satisfying the following requirements:
45

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 Honduran 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 Honduran 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.
46

D. Investment Advisors and Investment Managers. An Investment Entity

established in Honduras 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

Nonparticipating Financial Institution.

E. Collective Investment Vehicle. An Investment Entity established in Honduras 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 Nonparticipating 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 Nonparticipating 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 Honduran 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 Honduras that is 

not described in paragraph E or subparagraph F(2) of this section, consistent 

with paragraph 3 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 
47

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 

Honduras that satisfies the following requirements under the laws of Honduras.

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 Honduras 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 CNBS with respect to the

account;

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 Honduras

(other than an insurance or Annuity Contract) that satisfies the following 

requirements under the laws of Honduras.

a) The account is subject to regulation as a savings vehicle for purposes other

than for retirement;
48

b) The account is tax-favored (i.e., contributions to the account that would 

otherwise be subject to tax under the laws of Honduras 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 Honduras 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 Honduras 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 Honduras established in 

connection with any of the following:
49

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 Honduras 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:
50

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 Nonparticipating 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.