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Timestamp: 2019-10-19 04:11:37
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Abu Dhabi Global Market - Common Reporting Standard Regulations 2017
Financial Services and Markets Amendment Regulations 2016
Financial Services & Markets (Amendment) Regulations 2017
Financial Services and Markets (Amendment) Regulations 2018
Financial Services and Markets (Amendment No 2) Regulations 2018
Financial Services and Markets (Amendment No 3) Regulations 2018
Financial Services and Markets (Amendment No 4) Regulations 2018
Financial Services and Markets (Amendment No 5) Regulations 2018
Financial Services and Markets (Amendment) Regulations 2019
Financial Services and Markets (Amendment No 2) Regulations 2019
Bank Recovery and Resolution Regulations 2018
Common Reporting Standard (Amendment No. 1) Regulations 2019
Regulations to make provision for the enablement of the exchange of information in revenue and other matters as developed by the Organisation for Economic Co-operation and Development
Date of Enactment: 9 July 2017
The Board of Directors of the Abu Dhabi Global Market, in exercise of its powers under Article 6(1) of Law No. 4 of 2013 concerning the Abu Dhabi Global Market issued by His Highness the Ruler of the Emirate of Abu Dhabi, hereby enacts the following Regulations—
1. Application and defined terms
(1) These Regulations implement the standard for automatic exchange of financial account information in tax matters developed by the OECD, commonly known as the Common Reporting Standard (CRS), for the purpose of giving effect to The Multilateral Convention on Mutual Administrative Assistance in Tax Matters and the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Accountant Information.
(2) These Regulations apply to:
(a) any Reporting Financial Institution subject to the supervision of the Regulatory Authority for purposes of these Regulations;
(b) any Account Holder of a Reportable Account held with a Reporting Financial Institution subject to the supervision of the Regulatory Authority for purposes of these Regulations; and
(c) any other person to whom the Regulations apply.
(3) The defined terms listed in both section 13 and Part 8 of Schedule 1 of these Regulations shall have the corresponding meanings set out therein.
2. Status of OECD publications and material
(1) For the purposes of these Regulations, any explanatory material made and published by the OECD for the purpose of assisting with the interpretation of the Common Reporting Standard, inclusive of any commentary published by the OECD in respect thereof, is an integral part of the Common Reporting Standard and accordingly forms the required rights and obligations under these Regulations.
Part 2 Reporting and Role and Powers of the Regulatory Authority
3. Collecting and reporting information
(1) Each Reporting Financial Institution must collect and report to the UAE Competent Authority the information required in these Regulations by way of the reporting system provided by the Regulatory Authority for this purpose in the manner and on the dates prescribed by the Regulations, inclusive of but not limited to the dates referred to in Paragraph F of Part 1 in Schedule 1.
(2) A Reporting Financial Institution shall establish and implement appropriate systems and internal procedures to enable its compliance with these Regulations.
4. Role and powers of the Regulatory Authority
(1) The Regulatory Authority has such functions and powers as are conferred, or expressed to be conferred, on it:
(a) by or under these Regulations;
(b) any other instrument or enactment issued by the ADGM Board of Directors; or
(c) by the UAE Competent Authority or the Government from time to time.
(2) The Regulatory Authority has the power to do whatever it deems necessary for or in connection with, or reasonably incidental to, performing its functions and exercising its powers granted under these Regulations, inclusive of but not limited to:
(a) issuing guidance and directives pursuant thereto; and
(b) delegating its duties and powers under these Regulations to Designated Officers and other suitable persons.
5. Powers of inspection and investigation
(1) The Regulatory Authority may require a Reporting Financial Institution to provide records, information, explanations and particulars and to give all the required assistance which the Regulatory Authority may reasonably require in connection with the administration or enforcement of these Regulations.
(2) The Regulatory Authority may, by notice in writing, require a Reporting Financial Institution to provide to the Regulatory Authority within such time, not being less than ten (10) days, as may be provided by the notice, with such information as the Regulatory Authority may reasonably require for any purpose relating to the administration or enforcement of these Regulations.
(3) The Regulatory Authority may request information from and, at all reasonable times, enter any premises or place of business of a Reporting Financial Institution for the purposes of:
(a) determining whether information:
(i) included in an information return made under these Regulations by the institution is correct and complete; or
(ii) not included in an information return was correctly not included; or
(b) examining the systems and internal procedures put in place by a Reporting Financial Institution for the purposes of ensuring compliance with that Reporting Financial Institution's obligations under these Regulations.
(4) The Regulatory Authority may request information from any Account Holder that has a Reportable Account held with a Reporting Financial Institution subject to the supervision of the Regulatory Authority for purposes of these Regulations, inclusive of but not limited to Accounting Records and all other records held in connection with the information or certifications provided to the Reporting Financial Institution pursuant to these Regulations, and the Regulatory Authority may ask a Reporting Financial Institution to assist it to obtain such information or records from Account Holders.
(5) The Regulatory Authority may appoint Designated Officers to assist it in inspections performed at the premises of Reporting Financial Institutions pursuant to the provisions of subsections 5(1) to (4) and to submit such written reports in respect thereof as the Regulatory Authority may direct.
(6) The Regulatory Authority, or its delegate, may prescribe in a directive:
(a) penalties and Administrative Fees, in addition to the penalties and Administrative Fees stipulated in Schedule 2; and
(b) forms and additional procedures in relation to:
(i) the imposition and recovery of penalties and Administrative Fees imposed pursuant to these Regulations;
(ii) the enforcement of actions required by the Regulatory Authority pursuant to these Regulations; and
(iii) any objection or right of appeal in respect of any such penalty and or an Administrative Fee or action required or the enforcement thereof.
(7) The Regulatory Authority may commence an investigation in relation to a Reporting Financial Institution.
(8) For the purposes of subsection 5(7), sections 205 to 215 and section 217 of the Financial Services and Markets Regulations 2015 shall apply in relation to commencement and conduct of an investigation by the Regulatory Authority of a Reporting Financial Institution.
(1) Every Reporting Financial Institution shall keep records of the steps undertaken and any evidence relied upon for the performance of the due diligence procedures and the measures to obtain those records that the Reporting Financial Institution obtains or creates for the purpose of complying with these Regulations.
(2) Every Reporting Financial Institution that is required to keep, obtain or create records under these Regulations shall retain those records for a period of at least six (6) years after the date of reporting to the Regulatory Authority.
(3) Every Reporting Financial Institution required by these Regulations to keep records that does so electronically shall retain them in an electronically readable format for the retention period of six (6) years after the date of reporting it to the Regulatory Authority.
(4) Every Reporting Financial Institution that obtains or creates records, as required under these Regulations, in a language other than English shall, upon request, provide an English translation to the Regulatory Authority.
Part 4 Contraventions, enforcement and appeals
7. General contraventions
(1) A Reporting Financial Institution who:
(a) does an act or thing that is prohibited under these Regulations;
(b) does not do an act or thing that is required or directed to do under these Regulations; or
(c) otherwise contravenes these Regulations,
commits a contravention of these Regulations and is liable to a penalty or an Administrative Fee, or both, as provided for in Schedule 2, and any other penalty or Administrative Fee imposed by a Regulatory Authority pursuant to subsection 5(6)(a) or a requirement to perform any action directed by the Regulatory Authority pursuant to subsection 9(1)(c).
(1) If a Reporting Financial Institution, person or intermediary enters into any arrangements or engages in a practice, the main purpose or one of the main purposes, of which can reasonably be considered to be to avoid an obligation imposed under these Regulations, the Reporting Financial Institution, person or intermediary is subject to the obligation as if the Reporting Financial Institution, person or intermediary had not entered into the arrangement or engaged in the practice.
(1) Where the Regulatory Authority, or its delegate, considers that a Reporting Financial Institution has contravened a provision of these Regulations, it may by written notice to such Reporting Financial Institution:
(a) allege that the Reporting Financial Institution has committed the contravention and state the particulars of the facts it relies on;
(b) set out the details of the applicable penalty or Administrative Fee, or both, in respect of each contravention; and
(c) where necessary and appropriate the Regulatory Authority may order that certain action be taken to comply with these Regulations.
(2) The imposition of a penalty or Administrative Fee, or both, under subsection 9(1) shall be made within the period of twelve (12) months beginning with the date on which:
(a) the Reporting Financial Institution became liable to the penalty or Administration Fee, or both, or
(b) the contravention first came to the attention of the Regulatory Authority.
(3) Liability to a penalty or Administrative Fee, or both, under subsection 9(1) does not arise if the Reporting Financial Institution satisfies the Regulatory Authority that there is a reasonable excuse for contravening the Regulations.
(4) Neither of the following is a reasonable excuse for purposes of subsection 9(3):
(a) insufficiency of funds to do something; or
(b) reliance on another person to do something.
(5) If a Reporting Financial Institution has a reasonable excuse for contravening the Regulations up to a particular time or event, the Reporting Financial Institution shall not be liable to a penalty or Administrative Fee, or both, if it can show that any subsequent contravention of these Regulations was remedied without unreasonable delay after it became aware that the reasons providing the reasonable excuse had ceased.
(1) A Reporting Financial Institution may appeal against any penalty or Administrative Fee, or both, imposed or action ordered under subsection 9(1) on the following grounds:
(a) it disputes the grounds or reasons for the penalty or Administrative Fee, or both, provided by the Regulatory Authority;
(b) it disputes the amount of the penalty or Administrative Fee, or both, imposed; or
(c) it disputes the validity of any action ordered by the Regulatory Authority.
(2) Any appeal by a Reporting Financial Institution to a penalty or Administrative Fee, or both, or action ordered under subsection 9(1) shall be instituted by a written notice of appeal setting out the grounds of appeal delivered to the Regulatory Authority within a period of twenty (20) days from the date of the relevant notice provided to it under subsection 9(1).
(3) When considering a notice of appeal delivered pursuant to subsection 10(2), the Regulatory Authority may, after due consideration of the grounds of appeal:
(a) confirm, cancel or increase or vary the number of days of the failure in respect of any penalty or Administrative Fee, or both, originally imposed; or
(b) confirm, change or cancel any action originally ordered by the Regulatory Authority,
and the Regulatory Authority shall confirm such finding in writing to the Reporting Financial Institution.
(4) The Regulatory Authority shall within forty (40) days consider the appeal and provide a written notice of its decision. If the Regulatory Authority fails to give written notice of its decision for the appeal, then appeal will be deemed to have been successful.
(5) A penalty or Administrative Fee, or both, imposed or action ordered by a Regulatory Authority under subsection 9(1), or confirmed pursuant to subsection 10(3), shall be paid or performed within twenty (20) days after the date of the written notice provided pursuant to:
(a) Subsection 9(1); or
(b) Subsection 10(3),
(6) If, within the period specified in subsection 10(5):
(a) the Reporting Financial Institution pays the imposed penalty or Administrative Fee, or both, or performs the required action under the notice, then no further proceedings will be commenced against it in respect of the relevant contravention; or
(b) the Reporting Financial Institution fails to pay the imposed penalty or Administrative Fee or both, or perform the required action, or (if relevant) takes no action to appeal the imposition of the penalty or Administrative fee, or both, or required action pursuant to subsection 10(2), the Regulatory Authority, or its delegate, may apply to the ADGM Court, and the court may:
(i) order the payment of the penalty or Administrative Fee, or both,;
(ii) order for the required action to be taken; and
(iii) make any further order it deems fit.
Part 5 Indemnity, effective date and definitions
Unless it can be shown that it acted in bad faith, neither the Regulatory Authority, its delegate, nor any Designated Officer can be held liable for any act, attempted act or omission in the performance, purported non-performance or non-performance of its functions in connection with these Regulations.
(1) These Regulations become effective on date of enactment, except in respect of the following where they shall apply retrospectively:
(a) in respect of Pre-existing Accounts that are subject to due diligence requirements under the Regulations, the effective date for purposes of these Regulations is 31 December 2016; and
(b) in respect of New Accounts that are subject to due diligence requirements under the Regulations, the effective date for purposes of these Regulations is 1 January 2017.
(1) In these Regulations the defined terms listed in the table below shall have the following meanings:
Accounting Records means records and underlying documents comprising initial and other accounting entries and associated supporting documents, such as:
Account Holder has the meaning given to that term in subparagraph E (1), Part 8 of Schedule 1.
ADGM means the Abu Dhabi Global Market.
ADGM Court Means the Abu Dhabi Global Market court of first instance established under Abu Dhabi Law No. 4 of 2013.
Administrative Fee means any fee imposed by the Regulatory Authority upon a Reporting Financial Institution for the incomplete or late reporting of information as required under these Regulations and as set out in Schedule 2.
Common Reporting Standard means the standard for automatic exchange of financial account information developed by the OECD as amended from time to time by the OECD, the current format of which is set out in Schedule 1.
Designated Officer means any person, or delegate of that person, appointed by the Regulatory Authority pursuant to the provisions of subsection 5(5).
Government means the federal government of the UAE.
MAC means the Multilateral Convention on Mutual Assistance in Tax Matters signed by the Government on 21 April 2017.
MCAA means the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information entered into by the Government on 22 February 2017.
OECD means the Organisation for Economic Co-Operation and Development which was established by the Convention on the Organisation for Economic Co-operation and Development signed in Paris on 14th December, 1960.
Regulatory Authority means the ADGM Financial Services Regulatory Authority.
Reportable Account Has the meaning given to that term in subparagraph D (1), Part 8 of Schedule 1.
Reporting Financial Institutions has the meaning given to that term in subparagraph A (1), Part 8 of Schedule 1.
UAE Competent Authority means the UAE Ministry of Finance, or any other competent authority designated by the Government to facilitate the exchange of information under the Common Reporting Standard pursuant to the MAC or the MCAA.
Schedule 1 Automatic Exchange of Financial Account Information Regulations
Part 1 General Reporting Requirements
A. Subject to paragraphs C through E, each Reporting Financial Institution must collect and report to the UAE Competent Authority the following information with respect to each Reportable Account of such Reporting Financial Institution:
(1) the name, address, jurisdiction(s) of residence, TIN(s) and date and place of birth (in the case of an individual) of each Reportable Person that is an Account Holder of the account and, in the case of any Entity that is an Account Holder and that, after application of the due diligence procedures consistent with Parts 5, 6 and 7, is identified as having one or more Controlling Persons that is a Reportable Person, the name, address, jurisdiction(s) of residence and TIN(s) of the Entity and the name, address, jurisdiction(s) of residence, TIN(s) and date and place of birth of each Reportable Person;
(3) the name and identifying number (if any) of the Reporting Financial Institution;
(4) the account balance or value (including, in the case of a Cash Value Insurance Contract or Annuity Contract, the Cash Value or surrender value) as of the end of the relevant calendar year or, if the account was closed during such year, the closure of the 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; and
(b) the total gross proceeds from the sale or redemption of Financial Assets paid or credited to the account during the calendar year with respect to which the Reporting 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; and
(7) in the case of any account not described in subparagraph A(5) or (6), the total gross amount paid or credited to the Account Holder with respect to the account during the calendar year with respect to which the Reporting Financial Institution is the obligor or debtor, including the aggregate amount of any redemption payments made to the Account Holder during the calendar year.
C. Notwithstanding subparagraph A(1), with respect to each Reportable Account that is a Pre-existing Account or with respect to each Financial Account that is opened prior to becoming a Reportable Account, the TIN(s) or date of birth is not required to be reported if such TIN(s) or date of birth is not in the records of the Reporting Financial Institution and is not otherwise required to be collected by such Reporting Financial Institution under domestic law. However, a Reporting Financial Institution is required to use reasonable efforts to obtain the TIN(s) and date of birth with respect to Pre-existing Accounts by the end of the second calendar year following the year in which Pre-existing Accounts were identified as Reportable Accounts.
D. Notwithstanding subparagraph A(1), the TIN is not required to be reported if (i) a TIN is not issued by the relevant Reportable Jurisdiction or (ii) the domestic law of the relevant Reportable Jurisdiction does not require the collection of the TIN issued by such Jurisdiction.
F. Each Reporting Financial Institution must file an information return with the Regulatory Authority containing the information described in paragraph A on or before 30th June of the year following the calendar year to which the return relates.
G. If a Reporting Financial Institution applies the due diligence procedures described in Parts 5, 6 and 7 for a calendar year and no Financial Account is identified as a Reportable Account, the institution shall file an information return, which provides that the institution maintains no such Reportable Accounts in respect of that year, with the Regulatory Authority on or before 30th June of the year following the calendar year to which the return relates.
Part 2 General Due Diligence requirements
A. A Reporting Financial Institution must establish, maintain and document the due diligence procedures set out in Parts 2 through 7 that are designed to identify Reportable Accounts maintained by the institution.
B. An account is treated as a Reportable Account beginning as of the date it is identified as such pursuant to the due diligence procedures in Parts 2 through 7 and, unless otherwise provided, information with respect to a Reportable Account must be reported annually in the calendar year following the year to which the information relates.
C. The balance or value of an account is determined as of the last day of the calendar year.
D. Where a balance or value threshold is to be determined as of the last day of a calendar year, the relevant balance or value must be determined as of the last day of the reporting period that ends with or within that calendar year.
E. A Reporting Financial Institutions may use a service provider to fulfil the reporting and due diligence obligations imposed on such institution, but these obligations shall remain the responsibility of the Reporting Financial Institutions.
F. A Reporting Financial Institutions may apply
(a) the due diligence procedures for New Accounts to all Pre-existing Accounts or with respect to any clearly identified group of Pre-existing Accounts, and the rules otherwise applicable to Pre-existing Accounts continue to apply; and
(b) the due diligence procedures for High Value Accounts to Lower Value Accounts.
Part 3 Due Diligence for Pre-Existing Individual Accounts
The following procedures apply with respect to Pre-existing Individual Accounts.
A Pre-existing Individual Account that is a Cash Value Insurance Contract or an Annuity Contract is not required to be reviewed, identified or reported, provided the Reporting Financial Institution is effectively prevented by law from selling such Contracts to residents of a Reportable Jurisdiction.
B. Lower Value Accounts.
The following procedures apply with respect to Lower Value Accounts.
(1) Residence Address.
If the Reporting Financial Institution has in its records a current residence address for the individual Account Holder based on Documentary Evidence, the Reporting Financial Institution may treat the individual Account Holder as being a resident for tax purposes of the jurisdiction in which the address is located for purposes of determining whether such individual Account Holder is a Reportable Person.
(2) Electronic Record Search.
If the Reporting Financial Institution does not rely on a current residence address for the individual Account Holder based on Documentary Evidence as set forth in subparagraph B(1), the Reporting Financial Institution must review electronically searchable data maintained by the Reporting Financial Institution for any of the following indicia and apply subparagraphs B(3) to (6):
(c) one or more telephone numbers in a Reportable Jurisdiction and no telephone number in the jurisdiction of the Reporting Financial Institution;
(f) a "hold mail" instruction or "in-care-of" address in a Reportable Jurisdiction if the Reporting Financial Institution does not have any other address on file for the Account Holder.
(3) If none of the indicia listed in subparagraph B(2) 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 indicia being associated with the account, or the account becomes a High Value Account.
(4) If any of the indicia listed in subparagraph B(2)(a) through (e) are discovered in the electronic search, or if there is a change in circumstances that results in one or more indicia being associated with the account, then the Reporting Financial Institution must treat the Account Holder as a resident for tax purposes of each Reportable Jurisdiction for which an indicium is identified, unless it elects to apply subparagraph B(6) and one of the exceptions in that subparagraph applies with respect to that account.
(5) If a "hold mail" instruction or "in-care-of" address is discovered in the electronic search and no other address and none of the other indicia listed in subparagraph B(2)(a) through (e) are identified for the Account Holder, the Reporting Financial Institution must, in the order most appropriate to the circumstances, apply the paper record search described in subparagraph C(2), or seek to obtain from the Account Holder a self-certification or Documentary Evidence to establish the residence(s) for tax purposes of such Account Holder. If the paper search fails to establish an indicium and the attempt to obtain the self-certification or Documentary Evidence is not successful, the Reporting Financial Institution must report the account as an undocumented account to the UAE Competent Authority.
(6) Notwithstanding a finding of indicia under subparagraph B(2), a Reporting Financial Institution is not required to treat an Account Holder as a resident of a Reportable Jurisdiction if:
(a) the Account Holder information contains a current mailing or residence address in the Reportable Jurisdiction, one or more telephone numbers in the Reportable Jurisdiction (and no telephone number in the jurisdiction of the Reporting Financial Institution) or standing instructions (with respect to Financial Accounts other than Depository Accounts) to transfer funds to an account maintained in a Reportable Jurisdiction, and the Reporting Financial Institution obtains, or has previously reviewed and maintains, a record of:
(i) a self-certification from the Account Holder of the jurisdiction(s) of residence of such Account Holder that does not include such Reportable Jurisdiction; and
(ii) Documentary Evidence establishing the Account Holder's residence for tax purposes other than such Reportable Jurisdiction;
(b) the Account Holder information contains a currently effective power of attorney or signatory authority granted to a person with an address in the Reportable Jurisdiction, and the Reporting Financial Institution obtains, or has previously reviewed and maintains, a record of:
(i) a self-certification from the Account Holder of the jurisdiction(s) of residence of such Account Holder that does not include such Reportable Jurisdiction; or
(ii) Documentary Evidence establishing the Account Holder's residence for tax purposes other than such Reportable Jurisdiction.
C. Enhanced Review Procedures for High Value Accounts.
The following enhanced review procedures apply with respect to High Value Accounts.
(1) Electronic Record Search.
With respect to High Value Accounts, the Reporting Financial Institution must review electronically searchable data maintained by the Reporting Financial Institution for any of the indicia described in subparagraph B(2).
(2) Paper Record Search.
If the Reporting Financial Institution's electronically searchable databases include fields for, and capture all of the information described in, subparagraph C(3), then a further paper record search is not required. If the electronic databases do not capture all of this information, then with respect to a High Value Account, the Reporting 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 Financial Institution within the last five years for any of the indicia described in subparagraph B(2):
(3) Exception To The Extent Databases Contain Sufficient Information.
A Reporting Financial Institution is not required to perform the paper record search described in subparagraph C(2) to the extent the Reporting Financial Institution's electronically searchable information includes the following:
(4) Relationship Manager Inquiry for Actual Knowledge.
In addition to the electronic and paper record searches described in subparagraphs C(1) and (2), the Reporting Financial Institution must treat as a Reportable Account any High Value Account assigned to a relationship manager (including any Financial Accounts aggregated with that High Value Account) if the relationship manager has actual knowledge that the account is held by a resident for tax purposes in a Reportable Jurisdiction.
(5) Effect of Finding Indicia.
(a) If none of the indicia listed in subparagraph B(2) are discovered in the enhanced review of High Value Accounts described in paragraph C, and the account is not identified as held by a resident for tax purposes in a Reportable Jurisdiction in subparagraph C(4), then further action is not required until there is a change in circumstances that results in one or more indicia being associated with the account.
(b) If any of the indicia listed in subparagraphs B(2)(a) through (e) are discovered in the enhanced review of High Value Accounts described in paragraph C, or if there is a subsequent change in circumstances that results in one or more indicia being associated with the account, then the Reporting Financial Institution must treat the Account Holder as a resident for tax purposes of each Reportable Jurisdiction for which an indicium is identified unless it elects to apply subparagraph B(6) and one of the exceptions in that subparagraph applies with respect to that account.
(c) If a "hold mail" instruction or "in-care-of" address is discovered in the enhanced review of High Value Accounts described in paragraph C, and no other address and none of the other indicia listed in subparagraphs B(2)(a) through (e) are identified for the Account Holder, the Reporting Financial Institution must obtain from such Account Holder a self-certification or Documentary Evidence to establish the residence(s) for tax purposes of the Account Holder. If the Reporting Financial Institution cannot obtain such self-certification or Documentary Evidence, it must report the account as an undocumented account to the UAE Competent Authority.
(6) If a Pre-existing Individual Account is not a High Value Account as of 31 December 2016, but becomes a High Value Account as of the last day of a subsequent calendar year, the Reporting Financial Institution must complete the enhanced review procedures described in paragraph C with respect to such account within the calendar year following the year in which the account becomes a High Value Account. If based on this review such account is identified as a Reportable Account, the Reporting Financial Institution must report the required information about such account with respect to the year in which it is identified as a Reportable Account and subsequent years on an annual basis, unless the Account Holder ceases to be a Reportable Person.
(7) Once a Reporting Financial Institution applies the enhanced review procedures described in paragraph C to a High Value Account, the Reporting Financial Institution is not required to re-apply such procedures, other than the relationship manager inquiry described in subparagraph C(4), to the same High Value Account in any subsequent year unless the account is undocumented where the Reporting Financial Institution should re-apply them annually until such account ceases to be undocumented.
(8) If there is a change of circumstances with respect to a High Value Account that results in one or more indicia described in subparagraph B(2) being associated with the account, then the Reporting Financial Institution must treat the account as a Reportable Account with respect to each Reportable Jurisdiction for which an indicium is identified unless it elects to apply subparagraph B(6) and one of the exceptions in that subparagraph applies with respect to that account.
(9) A Reporting 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 a Reportable Jurisdiction, the Reporting Financial Institution is required to treat the new address as a change in circumstances and, if it elects to apply subparagraph B(6), is required to obtain the appropriate documentation from the Account Holder.
D. Review of Pre-existing High Value Individual Accounts must be completed by 31 December 2017 and review of Pre-existing Lower Value Individual Accounts must be completed by 31 December 2018.
E. Any Pre-existing Individual Account that has been identified as a Reportable Account under this Part must be treated as a Reportable Account in all subsequent years, unless the Account Holder ceases to be a Reportable Person.
Part 4 Due Diligence for new Individual Accounts
The following procedures apply with respect to New Individual Accounts.
B. If the self-certification establishes that the Account Holder is resident for tax purposes in a Reportable Jurisdiction, the Reporting Financial Institution must treat the account as a Reportable Account and the self-certification must also include the Account Holder's TIN with respect to such Reportable Jurisdiction (subject to paragraph D of Part 1) and date of birth.
Part 5 Due Diligence for Pre-Existing Entity Accounts
The following procedures apply with respect to Pre-existing Entity Accounts.
Unless the Reporting Financial Institution elects otherwise, either with respect to all Preexisting Entity Accounts or, separately, with respect to any clearly identified group of such accounts, a Pre-existing Entity Account with an aggregate account balance or value that does not exceed USD 250 000 as of 31 December 2016 is not required to be reviewed, identified, or reported as a Reportable Account until the aggregate account balance or value exceeds that amount as of the last day of any subsequent calendar year.
B. Entity Accounts Subject to Review.
A Pre-existing Entity Account that has an aggregate account balance or value that exceeds USD 250 000 as of 31 December 2016, and a Pre-existing Entity Account that does not exceed USD 250 000 as of 31 December 2016 but the aggregate account balance or value of which exceeds USD 250 000 as of the last day of any subsequent calendar year, must be reviewed in accordance with the procedures set forth in paragraph D.
C. Review Procedures for Identifying Entity Accounts With Respect to Which Reporting Is Required.
For Pre-existing Entity Accounts described in paragraph B, a Reporting Financial Institution must apply the following review procedures:
(1) Determine the Residence of the Entity.
(a) Review information maintained for regulatory or customer relationship purposes (including information collected pursuant to AML/KYC Procedures) to determine the Account Holder's residence. For this purpose, information indicating that the Account Holder's residence includes a place of incorporation or organisation, or an address in a Reportable Jurisdiction.
(b) If the information indicates that the Account Holder is a Reportable Person, the Reporting Financial Institution must treat the account as a Reportable Account unless it obtains a self-certification from the Account Holder, or reasonably determines based on information in its possession or that is publicly available, that the Account Holder is not a Reportable Person.
(2) Determine the Residence of the Controlling Persons of a Passive NFE.
With respect to an Account Holder of a Pre-existing Entity Account (including an Entity that is a Reportable Person), the Reporting Financial Institution must determine whether the Account Holder is a Passive NFE with one or more Controlling Persons and determine the residence of such Controlling Persons. If any of the Controlling Persons of a Passive NFE is a Reportable Person, then the account must be treated as a Reportable Account. In making these determinations the Reporting Financial Institution must follow the guidance in subparagraphs C(2)(a) through (c) in the order most appropriate under the circumstances.
(a) Determining whether the Account Holder is a Passive NFE. For purposes of determining whether the Account Holder is a Passive NFE, the Reporting Financial Institution must obtain a self-certification 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 NFE or a Financial Institution other than an Investment Entity described in subparagraph A(6)(b) of Part 8 that is not a Participating ADGM Financial Institution.
(c) Determining the residence of a Controlling Person of a Passive NFE. For the purposes of determining the residence of a Controlling Person of a Passive NFE, a Reporting Financial Institution may rely on:
(i) information collected and maintained pursuant to AML/KYC Procedures in the case of a Pre-existing Entity Account held by one or more NFEs with an aggregate account balance or value that does not exceed USD 1 000 000; or
(ii) a self-certification from the Account Holder or such Controlling Person of the jurisdiction(s) in which the controlling person is resident for tax purposes. If a self-certification is not provided, the Reporting Financial Institution will establish such residence(s) by applying the procedures described in paragraph C of Part 3.
D. Timing of Review and Additional Procedures Applicable to Pre-existing Entity Accounts.
(1) Review of Pre-existing Entity Accounts with an aggregate account balance or value that exceeds USD 250 000 as of 31 December 2016, must be completed by 31 December 2018.
(2) Review of Pre-existing Entity Accounts with an aggregate account balance or value that does not exceed USD 250 000 as of 31 December 2016, but exceeds USD 250 000 as of 31 December of a subsequent year, must be completed within the calendar year following the year in which the aggregate account balance or value exceeds USD 250 000.
(3) If there is a change of circumstances with respect to a Pre-existing Entity Account that causes the Reporting Financial Institution to know, or have reason to know, that the self-certification or other documentation associated with an account is incorrect or unreliable, the Reporting Financial Institution must re-determine the status of the account in accordance with the procedures set forth in paragraph C.
Amended on (12 September, 2019).
Part 6 Due Diligence for New Entity Accounts
The following procedures apply with respect to New Entity Accounts.
A. Review Procedures for Identifying Entity Accounts With Respect to Which Reporting Is Required.
For New Entity Accounts, a Reporting Financial Institution must apply the following review procedures:
(b) If the self-certification indicates that the Account Holder is resident in a Reportable Jurisdiction, the Reporting Financial Institution must treat the account as a Reportable Account, unless it reasonably determines based on information in its possession or that is publicly available that the Account Holder is not a Reportable Person with respect to such Reportable Jurisdiction.
With respect to an Account Holder of a New Entity Account (including an Entity that is a Reportable Person), the Reporting Financial Institution must determine whether the Account Holder is a Passive NFE with one or more Controlling Persons and determine the residence of such Reportable Persons. If any of the Controlling Persons of a Passive NFE is a Reportable Person, then the account must be treated as a Reportable Account. In making these determinations the Reporting Financial Institution must follow the guidance in subparagraphs A(2)(a) through (c) in the order most appropriate under the circumstances.
(a) Determining whether the Account Holder is a Passive NFE.
For purposes of determining whether the Account Holder is a Passive NFE, the Reporting Financial Institution must rely on a self-certification 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 NFE or a Financial Institution other than an Investment Entity described in subparagraph A(6)(b) of Part 8 that is not a Participating ADGM Financial Institution.
(b) Determining the Controlling Persons of an Account Holder.
For purposes of determining the Controlling Persons of an Account Holder, a Reporting Financial Institution may rely on information collected and maintained pursuant to AML/KYC Procedures.
(c) Determining the residence of a Controlling Person of a Passive NFE.
For purposes of determining the residence of a Controlling Person of a Passive NFE, a Reporting Financial Institution may rely on a self-certification from the Account Holder or such Controlling Person.
Part 7 Special Due Diligence Rules
A. Reliance on Self-Certifications and Documentary Evidence.
A Reporting Financial Institution may not rely on a self- certification or Documentary Evidence if the Reporting Financial Institution knows or has reason to know that the self-certification or Documentary Evidence is incorrect or unreliable.
B. Alternative Procedures for Financial Accounts held by Individual Beneficiaries of a Cash Value Insurance Contract or an Annuity Contract and for a Group Cash Value Insurance Contract or Group Annuity Contract.
A Reporting Financial Institution may presume that an individual beneficiary (other than the owner) of a Cash Value Insurance Contract or an Annuity Contract receiving a death benefit is not a Reportable Person and may treat such Financial Account as other than a Reportable Account unless the Reporting Financial Institution has actual knowledge, or reason to know, that the beneficiary is a Reportable Person. A Reporting Financial Institution has reason to know that a beneficiary of a Cash Value Insurance Contract or an Annuity Contract is a Reportable Person if the information collected by the Reporting Financial Institution and associated with the beneficiary contains indicia as described in paragraph B of Part 3. If a Reporting Financial Institution has actual knowledge, or reason to know, that the beneficiary is a Reportable Person, the Reporting Financial Institution must follow the procedures in paragraph B of Part 3.
(a) the Group Cash Value Insurance Contract or Group Annuity Contract is issued to an employer and covers 25 or more employees/certificate holders;
(b) the employee/certificate holders are entitled to receive any contract value related to their interests and to name beneficiaries for the benefit payable upon the employee's death; and
(c) the aggregate amount payable to any employee/certificate holder or beneficiary does not exceed USD 1 000 000.
The term "Group Cash Value Insurance Contract" means a Cash Value Insurance Contract that (i) provides coverage on individuals who are affiliated through an employer, trade association, labour union, or other association or group; and (ii) charges a premium for each member of the group (or member of a class within the group) that is determined without regard to the individual health characteristics other than age, gender, and smoking habits of the member (or class of members) of the group.
The term "Group Annuity Contract" means an Annuity Contract under which the obligees are individuals who are affiliated through an employer, trade association, labour union, or other association or group.
(1) Aggregation of Individual Accounts.
For purposes of determining the aggregate balance or value of Financial Accounts held by an individual, a Reporting Financial Institution is required to aggregate all Financial Accounts maintained by the Reporting Financial Institution, or by a Related Entity, but only to the extent that the Reporting Financial Institution's computerised systems link the Financial Accounts by reference to a data element such as client number or TIN, 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 subparagraph.
(2) Aggregation of Entity Accounts.
For purposes of determining the aggregate balance or value of Financial Accounts held by an Entity, a Reporting Financial Institution is required to take into account all Financial Accounts that are maintained by the Reporting Financial Institution, or by a Related Entity, but only to the extent that the Reporting Financial Institution's computerised systems link the Financial Accounts by reference to a data element such as client number or TIN, 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 subparagraph.
(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 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) Amounts Read to Include Equivalent in Other Currencies.
(a) All dollar amounts are in US dollars and shall be read to include equivalent amounts in other currencies, as determined by domestic law.
(b) In determining the balance or value of an account denominated in a currency (other than US dollars) for the purposes of these Regulations, the financial institution shall translate the relevant US dollars threshold amount described in these Regulations into the other currency by reference to the spot rate of exchange on the date for which the institution is determining the threshold amounts.
(5) Accounts with negative balance.
An account with a balance or value that is negative is deemed to have a balance or value equal to nil.
Part 8 Defined Terms
(1) The term "Reporting Financial Institution" means any ADGM Financial Institution that is not a Non-Reporting Financial Institution. The term "ADGM Financial Institution" means: (i) any Financial Institution that is resident in the ADGM, but excludes any branch of that Financial Institution that is located outside of the ADGM; and (ii) any branch of a Financial Institution that is not resident in the ADGM, if that branch is located in the ADGM.
(2) The term "Participating ADGM Financial Institution" means (i) any Financial Institution that is resident in a Participating Jurisdiction, but excludes any branch of that Financial Institution that is located outside such Participating Jurisdiction; and (ii) any branch of a Financial Institution that is not resident in a Participating Jurisdiction, if that branch is located in such Participating Jurisdiction.
(3) The term "Financial Institution" means a Custodial Institution, a Depository Institution, an Investment Entity, or a Specified Insurance Company.
(4) The term "Custodial Institution" means any Entity that holds, as a substantial portion of its business, Financial Assets for the account of others. 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% of the Entity's gross income during the shorter of: (i) the three-year period that ends on 31 December prior to the year in which the determination is being made; or (ii) the period during which the Entity has been in existence.
(5) The term "Depository Institution" means any Entity that accepts deposits in the ordinary course of a banking or similar business.
(6) The term "Investment Entity" means any Entity:
An Entity is treated as primarily conducting as a business one or more of the activities described in subparagraph A(6)(a), or an Entity's gross income is primarily attributable to investing, reinvesting, or trading in Financial Assets for the purposes of subparagraph A(6)(b), if the Entity's gross income attributable to the relevant activities equals or exceeds 50% of the Entity's gross income during the shorter of: (i) the three-year period ending on 31 December of the year preceding the year in which the determination is made; or (ii) the period during which the Entity has been in existence. The term "Investment Entity" does not include an Entity that is an Active NFE because that Entity meets any of the criteria in subparagraphs D(9)(d) through (g).
This paragraph 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.
(7) The term "Financial Asset" includes a security (for example, a share of stock in a corporation; partnership or beneficial ownership interest in a widely held or publicly traded partnership or trust; note, bond, debenture, or other evidence of indebtedness), partnership interest, commodity, swap (for example, interest rate swaps, currency swaps, basis swaps, interest rate caps, interest rate floors, commodity swaps, equity swaps, equity index swaps, and similar agreements), Insurance Contract or Annuity Contract, or any interest (including a futures or forward contract or option) in a security, partnership interest, commodity, swap, Insurance Contract, or Annuity Contract. The term "Financial Asset" does not include a non-debt, direct interest in real property.
(8) The term "Specified Insurance Company" means any Entity that is an insurance company (or the holding company of an insurance company) which issues, or is obligated to make payments with respect to, a Cash Value Insurance Contract or an Annuity Contract.
(1) The term "Non-Reporting Financial Institution" means any Financial Institution that is:
(c) any other Entity that presents a low risk of being used to evade tax, has substantially similar characteristics to any of the Entities described in subparagraphs B(1)(a) and (b), and is included in the list of Non-Reporting Financial Institutions referred to in Annex 1 of these Regulations, provided that the status of such Entity as a Non-Reporting Financial Institution does not frustrate the purposes of these Regulations;
(e) a trust to the extent that the trustee of the trust is a Reporting Financial Institution and reports all information required to be reported pursuant to Part 1 with respect to all Reportable Accounts of the trust.
(2) The term "Governmental Entity" means the government of a jurisdiction, any political subdivision of a jurisdiction (which, for the avoidance of doubt, includes a state, province, county, or municipality), or any wholly owned agency or instrumentality of a jurisdiction or of any one or more of the foregoing (each, a "Governmental Entity"). This category is comprised of the integral parts, controlled entities, and political subdivisions of a jurisdiction.
(a) An "integral part" of a jurisdiction means any person, organisation, agency, bureau, fund, instrumentality, or other body, however designated, that constitutes a governing authority of a jurisdiction. The net earnings of the governing authority must be credited to its own account or to other accounts of the jurisdiction, 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.
(b) A "controlled entity" means an Entity which is separate in form from the jurisdiction or that otherwise constitutes a separate juridical entity, provided that:
(3) The term "International Organisation" means any international organisation or wholly owned agency or instrumentality thereof. This category includes any intergovernmental organisation (including a supranational organisation) (i) that is comprised primarily of governments; (ii) that has in effect a headquarters or substantially similar agreement with the jurisdiction; and (iii) the income of which does not inure to the benefit of private persons.
(4) The term "Central Bank" means an institution that is by law or government sanction the principal authority, other than the government of the jurisdiction itself, issuing instruments intended to circulate as currency. Such an institution may include an instrumentality that is separate from the government of the jurisdiction, whether or not owned in whole or in part by the jurisdiction.
(5) The term "Broad Participation Retirement Fund" means a fund established to provide retirement, disability, or death benefits, or any combination thereof, to beneficiaries who are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered, provided that the fund:
(a) does not have a single beneficiary with a right to more than 5% of the fund's assets;
(ii) the fund receives at least 50% of its total contributions (other than transfers of assets from other plans described in subparagraphs B(5) through (7) or from retirement and pension accounts described in subparagraph C(17)(a)) from the sponsoring employers;
(iv) 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 USD 50 000 annually, applying the rules set forth in paragraph C of Part 7 for account aggregation and currency translation.
(6) The term "Narrow Participation Retirement Fund" means a fund established to provide retirement, disability, or death benefits to beneficiaries who are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered, provided that:
(d) participants that are not residents of the jurisdiction in which the fund is established are not entitled to more than 20 % of the fund's assets; and
(7) The term "Pension Fund of a Governmental Entity, International Organisation or Central Bank" means a fund established by a Governmental Entity, International Organisation or Central Bank to provide retirement, disability, or death benefits to beneficiaries or participants who are current or former employees (or persons designated by such employees), or who are not current or former employees, if the benefits provided to such beneficiaries or participants are in consideration of personal services performed for the Governmental Entity, International Organisation or Central Bank.
(8) The term "Qualified Credit Card Issuer" means a Financial Institution satisfying the following requirements:
(b) beginning on or before 1 January 2017, the Financial Institution implements policies and procedures either to prevent a customer from making an overpayment in excess of USD 50 000, or to ensure that any customer overpayment in excess of that amount is refunded to the customer within 60 days, in each case applying the rules set forth in paragraph C of Part 7 for account aggregation and currency translation. For this purpose, a customer overpayment does not refer to credit balances to the extent of disputed charges but does include credit balances resulting from merchandise returns.
(9) The term "Exempt Collective Investment Vehicle" means an Investment Entity that is regulated as a collective investment vehicle, provided that all of the interests in the collective investment vehicle are held by or through individuals or Entities that are not Reportable Persons, except a Passive NFE with Controlling Persons who are Reportable Persons.
(1) The term "Financial Account" means an account maintained by a Financial Institution, and includes a Depository Account, a Custodial Account and:
(a) in the case of an Investment Entity, any equity or debt interest in the Financial Institution. Notwithstanding the foregoing, the term "Financial Account" does not include any equity or debt interest in an Entity that is an Investment Entity solely because it (i) renders investment advice to, and acts on behalf of, or (ii) manages portfolios for, and acts on behalf of, a customer for the purpose of investing, managing, or administering Financial Assets deposited in the name of the customer with a Financial Institution other than such Entity;
(b) in the case of a Financial Institution not described in subparagraph C(1)(a), any equity or debt interest in the Financial Institution, if the class of interests was established with the purpose of avoiding reporting in accordance with Part 1; and
(2) 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.
(3) The term "Custodial Account" means an account (other than an Insurance Contract or Annuity Contract) which holds one or more Financial Assets for the benefit of another person.
(4) 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 Reportable Person will be treated as being a beneficiary of a trust if such Reportable 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.
(5) 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.
(6) 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.
(7) 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.
(8) 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:
(9) The term "Pre-existing Account" means a Financial Account maintained by a Reporting Financial Institution as of 31 December 2016.
The term "Pre-existing Account" means
(a) a Financial Account maintained by a Reporting Financial Institution as of 31 December 2016;
(i) the Account Holder also holds with the Reporting Financial Institution (or with a Related Entity within the same jurisdiction as the Reporting Financial Institution) a Financial Account that is a Pre-existing Account under subparagraph C(9)(a);
(ii) the Reporting Financial Institution (and, as applicable, the Related Entity within the same jurisdiction as the Reporting Financial Institution) treats both of the aforementioned Financial Accounts, and any other Financial Accounts of the Account Holder that are treated as Pre-existing Accounts under this subparagraph, as a single Financial Account for purposes of satisfying the standards of knowledge requirements described in paragraph A of Part 7, and for purposes of determining the balance or value of any of the Financial Accounts when applying any of the account thresholds;
(10) The term "New Account" means a Financial Account maintained by a Reporting Financial Institution opened on or after 1 January 2017 unless it is treated as a Preexisting Account under subparagraph C(9)(b).
(11) The term "Pre-existing Individual Account" means a Pre-existing Account held by one or more individuals.
(12) The term "New Individual Account" means a New Account held by one or more individuals.
(13) The term "Pre-existing Entity Account" means a Pre-existing Account held by one or more Entities.
(14) The term "Lower Value Account" means a Pre-existing Individual Account with an aggregate balance or value as of 31 December 2016 that does not exceed USD 1 000 000.
(15) The term "High Value Account" means a Pre-existing Individual Account with an aggregate balance or value that exceeds USD 1 000 000 as of 31 December 2016, or 31 December of any subsequent year.
(16) The term "New Entity Account" means a New Account held by one or more Entities.
(17) The term "Excluded Account" means any of the following accounts:
(v) either (i) annual contributions are limited to USD 50 000 or less; or (ii) there is a maximum lifetime contribution limit to the account of USD 1 000 000 or less, in each case applying the rules set forth in paragraph C of Part 7 for account aggregation and currency translation.
(iv) annual contributions are limited to USD 50 000 or less, applying the rules set forth in paragraph C of Part 7 for account aggregation and currency translation.
(i) a court order or judgment;
i. 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,
ii. 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,
iii. 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,
iv. the account is not a margin or similar account established in connection with a sale or exchange of a Financial Asset, and
v. the account is not associated with an account described in subparagraph C(17)(f);
(ii) beginning on or before 1 January 2017, the Financial Institution implements policies and procedures either to prevent a customer from making an overpayment in excess of USD 50 000, or to ensure that any customer overpayment in excess of that amount is refunded to the customer within 60 days, in each case applying the rules set forth in paragraph C of Part 7 for currency translation. For this purpose, a customer overpayment does not refer to credit balances to the extent of disputed charges but does include credit balances resulting from merchandise returns;
(g) any other account that presents a low risk of being used to evade tax, has substantially similar characteristics to any of the accounts described in subparagraphs C(17)(a) through (f), and is included in the list of Excluded Accounts referred to in Annex 2 of these Regulations, provided that the status of such account as an Excluded Account does not frustrate the purposes of these Regulations.
(1) The term "Reportable Account" means a Financial Account that is maintained by a Reporting Financial Institution and is held by one or more Reportable Persons or by a Passive NFE with one or more Controlling Persons that is a Reportable Person, provided it has been identified as such pursuant to the due diligence procedures described in Parts 2 through 7.
(2) The term "Reportable Person" means a Reportable Jurisdiction 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 Related Entity of a corporation described in clause (i); (iii) a Governmental Entity; (iv) an International Organisation; (v) a Central Bank; or (vi) a Financial Institution.
(3) The term "Reportable Jurisdiction Person" means an individual or Entity that is resident in a Reportable Jurisdiction under the tax laws of such jurisdiction, or an estate of a decedent that was a resident of a Reportable Jurisdiction. For this purpose, an Entity such as a partnership, limited liability partnership or similar legal arrangement, which has no residence for tax purposes shall be treated as resident in the jurisdiction in which its place of effective management is situated.
(4) The term "Reportable Jurisdiction" means:
(a) for all other purposes, a jurisdiction other than the United States of America or the UAE, and
(b) for the purposes of reporting the information the UAE Competent Authority under Part 1 of these Regulations, a jurisdiction which is identified in Annex 3 to these Regulations.
(5) The term "Participating Jurisdiction" means a jurisdiction which is identified in Annex 4 to these Regulations.
(6) The term "Controlling Persons" means the natural persons who exercise control over an Entity. In the case of a trust, that term means the settlor(s), the trustee(s), the protector(s) (if any), the beneficiary(ies) or class(es) of beneficiaries, and any other natural person(s) 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" must be interpreted in a manner consistent with the Financial Action Task Force Recommendations.
(7) The term "NFE" means any Entity that is not a Financial Institution.
(8) The term "Passive NFE" means any: (i) NFE that is not an Active NFE; or (ii) an Investment Entity described in subparagraph A(6)(b) that is not a Participating ADGM Financial Institution.
(9) The term "Active NFE" means any NFE that meets any of the following criteria:
(a) less than 50% of the NFE's gross income for the preceding calendar year is passive income and less than 50% of the assets held by the NFE during the preceding calendar year are assets that produce or are held for the production of passive income;
(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 organisation, business league, chamber of commerce, labour organisation, agricultural or horticultural organisation, civic league or an organisation operated exclusively for the promotion of social welfare;
(iv) the applicable laws of the NFE's jurisdiction of residence or the NFE's formation documents do not permit any income or assets of the NFE 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 NFE's charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the NFE has purchased; and
(v) the applicable laws of the NFE's jurisdiction of residence or the NFE's formation documents require that, upon the NFE's liquidation or dissolution, all of its assets be distributed to a Governmental Entity or other non-profit organisation, or escheat to the government of the NFE's jurisdiction of residence or any political subdivision thereof.
(1) 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 Directive, and such other person is treated as holding the account. 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.
(2) The term "AML/KYC Procedures" means the customer due diligence procedures of a Reporting Financial Institution pursuant to the anti-money laundering or similar requirements to which such Reporting Financial Institution is subject under domestic law.
(3) The term "Entity" means a legal person or a legal arrangement, such as a corporation, partnership, trust, or foundation.
(4) 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% of the vote and value in an Entity.
(5) An Entity is a "Related Entity" of another Entity if (a) either Entity controls the other Entity; (b) the two Entities are under common control; or (c) the two Entities are Investment Entities described in subparagraph A(6)(b), are under common management, and such management fulfils the due diligence obligations of such Investment Entities. For this purpose control includes direct or indirect ownership of more than 50% of the vote and value in an Entity.
(6) The term "TIN" means Taxpayer Identification Number (or functional equivalent in the absence of a Taxpayer Identification Number).
(7) The term "Documentary Evidence" includes any of the following:
(a) a certificate of residence issued by an authorised government body (for example, a government or agency thereof, or a municipality) of the jurisdiction in which the payee claims to be a resident;
(c) with respect to an Entity, any official documentation issued by an authorised 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 in which it claims to be a resident or the jurisdiction in which the Entity was incorporated or organised;
With respect to a Pre-existing Entity Account, Reporting Financial Institutions may use as Documentary Evidence any classification in the Reporting Financial Institution's records with respect to the Account Holder that was determined based on a standardised industry coding system, that was recorded by the Reporting Financial Institution consistent with its normal business practices for purposes of AML/KYC Procedures or another regulatory purposes (other than for tax purposes) and that was implemented by the Reporting Financial Institution prior to the date used to classify the Financial Account as a Pre-existing Account, provided that the Reporting Financial Institution does not know or does not have reason to know that such classification is incorrect or unreliable. The term "standardised industry coding system" means a coding system used to classify establishments by business type for purposes other than tax purposes.
Part 9 Complementary Reporting and Due Diligence Rules for Financial Account Information
(1) A "change in circumstances" includes any change that results in the addition of information relevant to a person's status or otherwise conflicts with such person's status. In addition, a change in circumstances includes any change or addition of information to the Account Holder's account (including the addition, substitution, or other change of an Account Holder) or any change or addition of information to any account associated with such account (applying the account aggregation rules described in subparagraphs C(1) through (3) of Part 7 of Annex I) if such change or addition of information affects the status of the Account Holder.
(2) If a Reporting Financial Institution has relied on the residence address test described in subparagraph B(1) of Part 3 of Annex I and there is a change in circumstances that causes the Reporting Financial Institution to know or have reason to know that the original Documentary Evidence (or other equivalent documentation) is incorrect or unreliable, the Reporting Financial Institution must, by the later of the last day of the relevant calendar year, or 90 calendar days following the notice or discovery of such change in circumstances, obtain a self-certification and new Documentary Evidence to establish the residence(s) for tax purposes of the Account Holder. If the Reporting Financial Institution cannot obtain the self-certification and new Documentary Evidence by such date, the Reporting Financial Institution must apply the electronic record search procedure described in subparagraphs B(2) through (6) of Part 3.
B. Self-certification for New Entity Accounts
(1) With respect to New Entity Accounts, for the purposes of determining whether a Controlling Person of a Passive NFE is a Reportable Person, a Reporting Financial Institution may only rely on a self-certification from either the Account Holder or the Controlling Person.
C. Residence of a Financial Institution
(1) A Financial Institution is "resident" in a Participating Jurisdiction if it is subject to the jurisdiction of such Participating Jurisdiction in that the Participating Jurisdiction is able to enforce reporting by the Financial Institution).
(2) In the case of a trust that is a Financial Institution (irrespective of whether it is resident for tax purposes in a Participating Jurisdiction), the trust is considered to be subject to the jurisdiction of a Participating Jurisdiction if one or more of its trustees are resident in such jurisdiction except if the trust reports all the information required to be reported under these Regulations with respect to Reportable Accounts maintained by the trust to another Participating Jurisdiction because it is resident for tax purposes in such other jurisdiction.
(3) Where a Financial Institution (other than a trust) does not have a residence for tax purposes (for example, because it is treated as fiscally transparent, or it is located in a jurisdiction that does not have an income tax), it is considered to be subject to the jurisdiction of a Participating Jurisdiction and it is, thus, a Participating ADGM Financial Institution if:
(a) it is incorporated under the laws of the Participating Jurisdiction;
(b) it has its place of management (including effective management) in the Participating Jurisdiction; or
(c) it is subject to financial supervision in the Participating Jurisdiction.
(4) Where a Financial Institution (other than a trust) is resident in two or more Participating Jurisdiction, such Financial Institution will be subject to the reporting and due diligence obligations of the Participating Jurisdiction in which it maintains the Financial Account(s).
D. Account maintained
(1) In general, an account would be considered to be maintained by a Financial Institution as follows:
E. Trusts that are Passive NFEs
(1) An Entity such as a partnership, limited liability partnership or similar legal arrangement that has no residence for tax purposes, according to subparagraph D(3) of Part 8, shall be treated as resident in the jurisdiction in which its place of effective management is situated. For these purposes, a legal person or a legal arrangement is considered "similar" to a partnership and a limited liability partnership where it is not treated as a taxable unit in a Participating Jurisdiction under the tax laws of such jurisdiction. However, in order to avoid duplicate reporting (given the wide scope of the term "Controlling Persons" in the case of trusts), a trust that is a Passive NFE may not be considered a similar legal arrangement.
F. Address of Entity's principal office
(1) One of the requirements described in subparagraph E(6)(c) of Part 8 is that, with respect to an Entity, the official documentation includes either the address of the Entity's principal office in a jurisdiction in which it claims to be a resident or a jurisdiction in which the Entity was incorporated or organised. The address of the Entity's principal office is generally the place in which its place of effective management is situated.
(2) The address of a Financial Institution with which the Entity maintains an account, a post office box, or an address used solely for mailing purposes is not the address of the Entity's principal office unless such address is the only address used by the Entity and appears as the Entity's registered address in the Entity's organisational documents.
(3) An address that is provided subject to instructions to hold all mail to that address is not the address of the Entity's principal office.
For the purposes of the Standard, the following are non-reporting financial institutions:
• Not applicable as at the date of publication of these amendments.
For the purposes of the Standard the following are excluded accounts:
For the purposes of the Standard, the following are reportable jurisdictions:
• As per the list published by the UAE Competent Authority on its website from time to time.
For the purposes of the Standard, the following are participating jurisdictions.
Schedule 2 Penalties and Fees
Every Reporting Financial Institution which fails to comply with a duty or obligation imposed by these Regulations is liable to the penalties and or fees set out in the table below:
No Contravention Penalty / Late Reporting Fee
1.1 A Reporting Financial Institution signs or otherwise positively affirms a false self-certification. AED 25,000 penalty
1.2 A Reporting Financial Institution fails to keep records of the due diligence procedures performed under the Regulations, or fails to keep them for a period of six (6) years pursuant to the requirements of the Regulations. AED 10,000 penalty
1.3 A Reporting Financial Institution fails to apply the due diligence procedures specified in Schedule 1, Part 2 through to Part 7 in Schedule 1. AED 25,000 penalty
1.4 A Reporting Financial Institution fails to report the information required to be reported in terms of these Regulation. AED 10,000 penalty
AED 500 Administrative Fee for every day the failure continues up to a maximum amount of AED 90,000 in Administrative Fees
1.5 A Reporting Financial Institution fails to report the information required to be reported in terms of these Regulation in a complete and accurate manner. Minor non-compliance:
AED 1,000 Administrative Fee
AED 100 Administration
Fee for every day the failure continues up to of AED 25,000 in Administrative Fees
AED 250,000 penalty
1.6 Penalties and Administrative Fees that remain outstanding for a period of longer than thirty (30) days, or a Reporting Financial Institution fails to perform an action ordered by the Regulatory Authority for a period of longer than thirty (30) days, as the case may be, the Regulatory Authority may serve further default notices in accordance with these Regulations on the said Reporting Financial Institution imposing with each successive notice double the amount of the said penalties and Administrative Fees, provided that each such successive note shall supersede the previous notice served on the Reporting Financial Institution for the same default but any payment made in respect of that previous notice shall be taken into account accordingly. Double the amount of the previous penalty or Administrative Fee, or both, provided that such penalties and Administrative Fees for each contravention shall not exceed an aggregate amount of AED 250,000