Make Sure You have Filed FATCA Compliance Certifications
Many Indian banks and financial institutions have, in recent years, been requesting customers to complete a ‘FATCA compliance certificate’. The reason for the request is that India and the US signed an agreement to implement the Foreign Account Tax Compliance Act (FATCA) which allows automatic exchange of tax information between the two countries. 
 
Under the FATCA pact, financial institutions in India would be required to report information about US account-holders/taxpayers directly to the Indian government, which would be then passed on to the US Internal Revenue Service (IRS). FATCA is an important part of the US government’s effort to address tax evasion. 
 
Last year, market regulator Securities and Exchange Board of India (SEBI) required that Indian financial institutions have to file certification of their FATCA compliance with SEBI on an annual basis as well as put in place a system to validate the information collected. Account-holders must provide a self-certification of compliance under FATCA. Failure to provide self-certification of compliance could result in the non-compliant accounts being blocked and made inaccessible for any transactions.
 
FATCA is part of the US’s answer to tracking money hidden in offshore accounts so it can be brought into the US tax net. Over 100 countries have signed FATCA and automatically report foreign accounts and income data to the US IRS. As a result, foreign banking secrecy no longer exists: virtually all foreign banks report their data to the IRS. In 2015, India had signed the inter-governmental agreement (IGA) with the US for implementing FATCA.  
 
Indian investors (including non-resident Indians—NRIs), who hold accounts in any Indian financial institution such as mutual funds or have bank fixed deposits, must file a FATCA self-certification form. All joint investment account-holders, including any power of attorney holders and guardians of minors, also need to attach their FATCA/CRS (Common Reporting Standard) certifications.
 
The account-holders need to provide details such as tax residency status in India, passport status, immigration status and documents supporting it, such as documents stating place of birth, occupation, income details, and tax identification number.
 
Account-holders should be certain that they are in full compliance with all US tax and reporting requirements, to avoid future tax and legal problems. For example, US tax law requires annual information reporting on all Indian accounts over US$10,000 in the aggregate. 
 
IRS has established several amnesty programmes, under which a non-compliant individual can become compliant and avoid potentially high penalties or criminal prosecution. However, these amnesty programmes, generally, require the taxpayer to come forth before being contacted by IRS.
 
Account-holders should seek competent US tax legal advice before completing any self-certification or know your customer (KYC) documents for non-compliant accounts.
 
(Parag Patel is a US-based tax attorney with Patel Law Offices in New Jersey, USA.)
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Jet Airways: SEBI Says Not Received any Reference on Relaxations of Regulations
Market regulator Securities & Exchange Board of India (SEBI) has clarified that it has not received any reference on relaxing regulations in the Jet Airways Ltd matter. Some newspapers have published reports attributing views of SEBI on certain relaxations of regulations to Jet Airways. 
 
In a statement SEBI says, "It is hereby clarified that SEBI has neither received any reference in this regard from any quarter nor has it expressed any views in the matter."
 
According to reports, State Bank of India (SBI) chairman Rajneesh Kumar was scheduled to meet SEBI chairman Ajay Tyagi for a proposal to revive the ailing carrier. "Etihad Group chief executive (CEO) Tony Douglas earlier wrote to SBI, saying that the airline will invest in Jet only at Rs150 per share. Etihad wants an exemption from SEBI on preferential pricing and open offer guidelines in order to invest more money in jet for its bailout," a report from CNBC-TV18 had said.
 
Abu Dhabi-based Etihad, which owns 24% in the Indian carrier, and Jet Airways chairman Naresh Goyal, who owns 51% of the troubled airline, have been clashing over how to revive the airline, which defaulted on loans last month. Jet Airways owes more than Rs8,000 crore to lenders. 
 
The SBI chairman met SEBI chief on Wednesday; however, no details were available about issued discussed between them. 
 
Last week, Mr Kumar had said that SBI-led consortium of lenders had not rejected Etihad Airways’ bailout offer for debt-rideen Jet Airways and was waiting for SEBI decision on exemption to the UAE-based carrier. “If no regulatory exemption is required, then it is easier (to resolve). If a regulatory exemption is required, then they have to approach the regulator and we need to know the regulator’s view," the SBI chief was quoted as saying in a report from Business Standard.
 
Quoting sources, a report from Economic Times says that market regulator is unlikely to give an exemption to Etihad from making an open offer to minority shareholders of Jet Airways. 
 
“The current regulations do not permit any such exemption. The rules permit exemptions only for those companies that are being resolved under the bankruptcy code,” one person, who is involved in the process, told the newspaper.
 
Etihad, for pouring more funds in the Indian carrier, wants Mr Goyal to give up his seat on the board and cut down his stake to 22% from 51% at present and the debt should not be converted into equity. At the same time, the Jet Airways promoter had reportedly told SBI that he was ready to invest up to Rs700 crore and pledge all his shares if he is allowed to retain 25% stake in the carrier, the  report from Business Standard says.
 
Last year, in August, there were reports about Jet Airways raising a $400 million fund from private equity (PE) players. However, the carrier had said that the article published by Economic Times was 'purely speculative in nature'.
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COMMENTS

Meenal Mamdani

4 weeks ago

Naresh Goyal should be forced to step down. The airline has suffered significant losses under his management. Both Etihad and Tatas had demanded that as a condition of putting more money into the airline.

We will see if Goyal has any pull with the current govt and manages to get the rule change that he wants. If he does, then we will know that Modi govt is as pliable as the previous UPA govt.

Why Aren’t Hedge Funds Required to Fight Money Laundering?
For many years, the federal government has required banks, brokerages and even casinos to take steps to stop customers from using them to clean dirty money. 
 
Yet one major part of the financial system has remained stubbornly exempt, despite experts’ repeated warnings that it is vulnerable to criminal manipulation. Investment companies such as hedge funds and private equity firms have escaped multiple efforts to subject them to rules meant to combat money laundering. 
 
The latest attempt, which began in 2015, appears to have ground to a halt, according to sources familiar with the process. 
 
“You’ve got several trillion dollars, the management of which nobody is required to ask any questions about where that money is coming from,” said Clark Gascoigne, deputy director of the Financial Accountability and Corporate Transparency Coalition. “This is very problematic.” 
 
The Financial Action Task Force, an intergovernmental organization that seeks to combat money laundering around the world, characterized the lack of anti-money laundering rules for investment advisers, such as those who manage hedge funds and private equity funds, as one of the United States’ most significant lapses in a report two years ago. 
 
The push to regulate hedge funds and similar investment firms took off after the Sept. 11 attacks, when Congress passed the Patriot Act. Among other things, the law required federal agencies to take new steps to keep illicit money out of the U.S. financial system. The Treasury Department exempted investment firms at the time, planning to return to them after tackling other sectors. “Eighteen years ago, the Patriot Act required investment companies to install their own AML [anti-money laundering] programs,” said Elise Bean, a former staff director of the U.S.
 
Senate investigations subcommittee who supports the proposed rule. “But Treasury has yet to enforce the law,” she said. 
 
The Treasury Department, through its Financial Crimes Enforcement Network, or FinCEN, initially proposed rules in 2002 and 2003 requiring firms like hedge funds and their investment advisers to adopt anti-money laundering measures. That attempt languished as FinCEN waited for the Securities and Exchange Commission to retool its approach, said Alma Angotti, who wrote the original proposal while at FinCEN and is now co-head of global investigations for the consulting firm Navigant. So much time passed that FinCEN withdrew the proposed rules in 2008. FinCEN then launched its second attempt to impose such regulations seven years later. 
 
That second attempt is the one that has now crawled to a virtual stop. “It’s the kind of thing that should have taken two to three years, not 17,” said Joshua Kirschenbaum, senior fellow focusing on illicit finance at the nonpartisan think tank the German Marshall Fund and a former supervisor in FinCEN’s enforcement division. 
 
Hedge funds and private equity funds can be attractive to big-dollar launderers who prize the funds’ anonymity, the variety of investments they offer and, in some cases, their use of off-shore tax and secrecy havens, experts say. After 2001, the number of annual hedge fund launches surged more than threefold, according to one report, and investments by high net worth individuals exceeded those of institutional investors. Continue Reading… 
 
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