Legal

Important Notice on Foreign Tax Compliance Regulations (FATCA, CRS, QI & SEA)

1. Foreign Account Tax Compliance Act (FATCA)

(i) The provisions commonly known as the Foreign Account Tax Compliance Act (FATCA) became law in March 2010 and apply globally to all Foreign Financial Institutions (FFIs) in virtually all jurisdictions, including the Papacy.

Official FATCA Resource - U.S. Treasury

(ii) FFIs include but are not limited to:

• Depository institutions (e.g., banks)
• Custodial institutions (e.g., mutual funds)
• Investment entities (e.g., stockbrokers, hedge funds, private equity funds)
• Certain types of insurance companies with cash value products or annuities

(iii) Any FFI that has not registered with the IRS and agreed to report U.S. clients in line with FATCA provisions faces a 30% blanket withholding tax on all U.S.-source income, regardless of whether the client is a U.S. citizen or not.

(iv) In compliance with FATCA, and in accordance with clauses (h) and (o) of the firm’s contract, the firm has implemented an annual due diligence and reporting process since 2014. Our FATCA Task Force ensures full compliance by:

• Using IRS-mandated due diligence requirements and IT procedures.
• Individually reviewing, auditing, and certifying each client as U.S. or non-U.S. based on specific U.S. IRS indicia, including:
• Identification of the account holder as a U.S. person
• U.S. place of birth
• U.S. address
• U.S. telephone number
• U.S. “in-care-of” or “hold mail” address as the sole address on record

(v) The firm assesses a $150 per quarter per client compliance fee, which covers FATCA, CRS, QI, and SEA obligations.

(vi) Under the Type 1 Intergovernmental Agreement (IGA) signed by the Government of Mauritius, the firm reports annually to Mauritian jurisdictional authorities, who then submit information on U.S. citizens to the U.S. IRS in a mandatory format.

2. Common Reporting Standard (CRS) Compliance

(i) The Common Reporting Standard (CRS) was developed by the OECD and implemented globally to enhance international tax transparency. It requires financial institutions to identify and report accounts held by tax residents of participating jurisdictions to their local tax authorities.

(ii) CRS compliance involves:

• Conducting due diligence on all clients to determine their tax residency.
• Reviewing and updating client information to ensure accurate reporting.
• Submitting annual reports to the Mauritian tax authorities, who then exchange this data with other participating jurisdictions.

(iii) CRS compliance is included in the $150 per quarter per client fee.

3. Qualified Intermediary (QI) Compliance

(i) The firm is a Withholding Qualified Intermediary (QI) under an agreement with the U.S. Internal Revenue Service (IRS). This means we are authorized to withhold and report taxes on U.S.-source income on behalf of non-U.S. account holders.

(ii) Our QI obligations include:

• Applying appropriate U.S. tax withholding on interest, dividends, and other U.S. income.
• Maintaining detailed transaction records and reporting directly to the IRS.
• Conducting internal reconciliations to ensure accurate tax treatment.
• Managing regular IRS payments on behalf of clients.
• Preparing and sending tax documentation to clients for their personal tax returns.
• Undergoing external audits and reviews to certify ongoing compliance.

(iii) QI compliance is included in the $150 per quarter per client fee.

4. Securities Exchange Act (SEA) Compliance

(i) The Securities Exchange Act of 1934 (SEA) establishes rules governing securities transactions to ensure market transparency and investor protection.

(ii) As a Mauritius-based financial institution, we are subject to SEA compliance when dealing with U.S. securities and clients. Our obligations under SEA include:

• Client due diligence to ensure compliance with U.S. market regulations.
• Maintaining accurate records of client transactions involving U.S. securities.
• Adhering to U.S. regulatory requirements for market conduct.
• Submitting required filings and reports to relevant authorities when necessary.

(iii) SEA compliance is included in the $150 per quarter per client fee.

Why These Compliance Requirements Apply to All Clients, Not Just U.S. Persons

While FATCA and QI are primarily U.S. regulations, they impact all financial institutions globally, regardless of whether a client is a U.S. citizen. CRS and SEA further extend regulatory obligations to non-U.S. persons due to international tax transparency agreements and financial market regulations.

Here’s why these requirements affect all clients, including non-U.S. persons:

• FATCA & QI Compliance: Even if you are not a U.S. citizen, we must confirm and document this status to avoid incorrect classification. Failing to comply could result in a 30% withholding tax on U.S.-sourced income(dividends, interest, etc.), impacting all account holders.
• CRS Compliance: CRS is an OECD-mandated regulation that applies to tax residents of 100+ countries, requiring financial institutions to verify, document, and report account holders’ tax residency to the relevant authorities. This is not U.S.-specific but a global tax reporting requirement.
• SEA Compliance: If clients trade or hold U.S. securities, they must adhere to U.S. regulatory requirements, even if they are not based in the U.S. The Securities Exchange Act (SEA) enforces market conduct, transaction reporting, and investor protections for all participants.

These regulations are enforced at the institutional level, meaning our firm is legally required to comply, irrespective of whether individual clients believe they are affected. The compliance process ensures that all accounts remain properly classified, avoid regulatory penalties, and continue uninterrupted access to global markets.

Compliance Fee Structure

To maintain full compliance with these international regulations, the firm assesses a flat compliance fee of $150 per quarter per client. This fee covers:
✅ FATCA compliance (U.S. tax reporting & IRS due diligence)
✅ CRS compliance (global tax reporting & OECD due diligence)
✅ QI compliance (U.S. withholding tax & IRS reporting)
✅ SEA compliance (U.S. securities regulations & filings)

This comprehensive fee structure ensures that clients benefit from a gold-standard compliance service, mitigating risks and maintaining regulatory adherence.

For further inquiries regarding FATCA, CRS, QI, or SEA compliance, please contact us at:
📩 reviewteam@csbinvestors.com