Banking; Compliance | Every Brazilian Financial Institution with American Clients Must Report to FATCA via e-Financeira

Brazilian financial institutions whose clients are considered American individuals or legal entities for purposes of FACTA must comply with the obligation to identify and report information to the Internal Revenue Service (IRS).

The Foreign Account Tax Compliance Act (FATCA) is a United States law aimed at controlling and combating tax evasion by American taxpayers who have accounts or financial assets abroad.

FATCA requires foreign financial institutions to identify and report to the IRS information related to the accounts of American clients who are considered US Individuals or Legal Entities.

In 2014, Brazil and the United States signed an intergovernmental agreement that regulated mutual assistance in tax matters between the Brazilian Federal Revenue Service (RFB) and the IRS.

Here are 5 key points about FATCA reporting by Brazilian financial institutions:

1. What is FATCA? FATCA is the US law that requires foreign financial institutions to identify and report all accounts or financial assets held by customers classified as US Individuals or Specified Entities.

2. How to obtain a GIIN? The Global Intermediary Identification Number (GIIN) is the identification number obtained by a foreign financial institution after registering on the IRS portal, through which it will report its data to the IRS and declare its FATCA compliance.

3. Who must report FATCA? All Brazilian financial institutions that hold accounts for US Individuals or Specified Entities, as defined in the Agreement, must report FATCA.

4. What must be reported under FATCA? Information related to the account holder and account of a US Individual or Specific Legal Entity held at the Brazilian financial institution, the absence of active reportable accounts (Zero Report), as well as accounts and account holders that the Brazilian financial institution believes have evidence of ties to the United States, after conducting enhanced due diligence by the financial institution (FATCA Due Diligence).

5. How does reporting via e-Financeira work? After conducting FATCA Due Diligence on its customers, the financial institution will collect documentation from US customers considered to be US Individuals or Specific Legal Entities and will communicate this information through the RFB’s e-Financeira platform, in a format identical to that used for reporting to the RFB. The RFB is responsible for sending the information to the IRS.

Given the international relevance of this topic, proper compliance with FATCA obligations by Brazilian financial institutions represents international compliance and institutional risk management, reinforcing the integrity and transparency of Brazilian financial institutions.