Ffi Agreement Model 2

It should be noted that the International Capital Market Association proposed the FATCA language as part of the Global Master Repurchase Agreement, which includes similar compensation. Although this is not as explicit with regard to the applicability of the language to FFI intermediaries under Model 2, this language will apply primarily to counterparties in the IGA jurisconsultations of Model 2. In addition, the Securities Industry and Financial Markets Association proposed the FATCA language under the Master Repurchase Agreement, which takes a similar approach, and similar compensation applies to transactions governed by the 2002 International Exchange and Settlement Association (ISDA) Framework Agreement, for which counterparties have either entered into the ISDA “FATCA Protocol”, is the standard FATCA language of ISDA in the corresponding calendar. has been registered. This issue has not yet been addressed as part of the current market-standard approach to fatca treatment in the context of the global corporate securities agreement. Market participants should consider whether to adopt a similar approach in other contexts, taking into account that differences between withholding risks and payment mechanisms may require a different approach. As already stated, Model 1 is generally not required to withhold FATCA payments they make, while Model 2 FFIs may have a residual withholding obligation. Under the FFI Agreement, there are generally two situations in which Model 2 FFIs may have FATCA withholding obligations: (1) where Model 2 FFI makes payments under a commitment determined by reference to dividends paid on U.S. shares (i.e. equivalent dividend payments pursuant to Section 871(m)) and, more importantly, when the Model 2 FFI acts as an intermediary, and an underlying payer from a U.S. “withholding payment” source cannot be withheld in accordance with FATCA. The FFI agreement provides that a Model 2 FFI acting as an intermediary is generally not required to withhold under FATCA if it provides the underlying payer of a retained payment with sufficient information to enable the payer to withhold.

However, the Model 2 FFI must withhold a payment insinuated from an ultimate recipient who is not authorized to receive payments without FATCA withholding if the Model 2 FFI knows or has reason to know that the underlying payer has not withheld for FATCA purposes. . . .