Investment Management Quiz
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Questions and Answers

What does an Intergovernmental Agreement (IGA) simplify for Financial Institutions?

  • Client confidentiality agreements
  • Tax exemptions for all clients
  • Reporting and compliance obligations (correct)
  • Investment strategies for funds

Which of the following is an example of a Financial Institution registered with the US IRS?

  • Bank of America
  • JP Morgan Chase
  • Wells Fargo Bank
  • BPI Direct BanKO (correct)

In which Model of the IGA do FFIs report to the local country authority?

  • Model I (correct)
  • Model A
  • Model II
  • Model B

What is the purpose of the Global Intermediary Identification Number (GIIN)?

<p>It serves as proof of registration with the US IRS (B)</p> Signup and view all the answers

What characterizes the first 13 characters of a GIIN?

<p>They are system generated (B)</p> Signup and view all the answers

Which of the following countries is associated with Model I under the IGA?

<p>Philippines (A)</p> Signup and view all the answers

What do the 14th and 15th characters in a GIIN indicate?

<p>The role of the Financial Institution (D)</p> Signup and view all the answers

Which of the following codes indicates a Lead Entity in a GIIN?

<p>LE (C)</p> Signup and view all the answers

What does the term 'US Person' include?

<p>Passport holder and Dual (B), SSN holder and Dual (C)</p> Signup and view all the answers

If a client has US indicia of place of birth but is already a Non-US Person, what are the documentary requirements?

<p>All of the Above (D)</p> Signup and view all the answers

Does having US indicia ensure that the client is a US Person?

<p>No, it is not a guarantee (B)</p> Signup and view all the answers

Is the client's documentation sufficient if they worked in the US for 6 years and submitted a Certificate of Loss of Nationality?

<p>No, additional proof of residency is needed (A)</p> Signup and view all the answers

What is the first step in identifying if an entity is a US or Non-US entity?

<p>Obtain the Entity’s US TIN (B)</p> Signup and view all the answers

Which form should a Specified US Entity submit to comply with FATCA?

<p>IRS Form W-9 (A)</p> Signup and view all the answers

For a Non-US Foreign Financial Institution (FFI) incorporated in the Philippines, what must they obtain?

<p>Entity’s GIIN (B)</p> Signup and view all the answers

Which classification requires an entity to obtain its GIIN?

<p>FFI in a Partner Jurisdiction (D)</p> Signup and view all the answers

Which of the following would qualify as passive income?

<p>Dividends from stocks (D)</p> Signup and view all the answers

What is NOT considered passive income according to the provided description?

<p>Income from selling handmade crafts (A)</p> Signup and view all the answers

Which document is mentioned as necessary for NFFE – Passive with Controlling US Person?

<p>BPI FATCA Form (B)</p> Signup and view all the answers

What must a corporate officer do concerning the BPI FATCA Form?

<p>Certify the correctness of data (C)</p> Signup and view all the answers

Which of the following issues could arise during FATCA compliance review?

<p>Erroneous Entity FATCA classification (B)</p> Signup and view all the answers

Which financial asset transaction is considered under passive income?

<p>Futures and options trading (C)</p> Signup and view all the answers

What must be obtained from financial institutions in relation to FATCA?

<p>GIIN (B)</p> Signup and view all the answers

Which scenario describes a passive income generating activity?

<p>Investment in stocks for dividends (A)</p> Signup and view all the answers

What document should be obtained to verify if an entity is a Specified US Entity?

<p>IRS Form W-9 (A), Entity's US TIN (B)</p> Signup and view all the answers

Which classification requires an entity to accomplish a separate FATCA Self Certification Form?

<p>Non-Financial Foreign Entity (NFFE) - Passive with Controlling US Person (C)</p> Signup and view all the answers

What is required for a FFI that is incorporated outside of the Philippines?

<p>Entity's GIIN (B)</p> Signup and view all the answers

Which of the following is classified as a Non-US/Foreign Financial Institution?

<p>FFI with GIIN incorporated in the Phils. (D)</p> Signup and view all the answers

What classification includes entities that are tax-exempt under US federal income tax?

<p>US Entity Others (D)</p> Signup and view all the answers

What is NOT required from a Non-Financial Foreign Entity (NFFE) - Active?

<p>FATCA Self Certification Form (D)</p> Signup and view all the answers

Which classification of entity is not allowed to open accounts?

<p>Non-Participating Foreign Financial Institution (NPFFI) (B)</p> Signup and view all the answers

Which document is needed for entities classified as FFI GIIN not needed?

<p>IRS Form W-8 BEN E (B)</p> Signup and view all the answers

What FATCA classification does Deutsche Bank AG fall under?

<p>FFI in a Partner Jurisdiction (C)</p> Signup and view all the answers

Which entity is classified as a US Entity Others under FATCA?

<p>Delta Airline (B)</p> Signup and view all the answers

What classification applies to the University of Oxford in terms of FATCA?

<p>NFFE Active (A)</p> Signup and view all the answers

Which of the following organizations is classified as NFFE Active?

<p>World Health Organization (D)</p> Signup and view all the answers

What does the classification 'FFI GIIN not Needed' indicate about Rural Bank of Laguna?

<p>It is a non-US financial institution with only low-value accounts. (D)</p> Signup and view all the answers

Which classification applies to the U.S Embassy?

<p>US Entity Others (C)</p> Signup and view all the answers

How is Globe Telecoms classified under FATCA?

<p>NFFE Active (C)</p> Signup and view all the answers

What FATCA classification does the United Nations hold?

<p>NFFE Active (A)</p> Signup and view all the answers

Flashcards

Intergovernmental Agreement (IGA)

An agreement between a country and the US to help implement the Foreign Account Tax Compliance Act (FATCA). It simplifies reporting and compliance for financial institutions (FFIs).

Model I vs. Model II IGA Models

The two main models for implementing FATCA through IGAs. In Model I, FFIs report to their local authorities, who then report to the US IRS. In Model II, FFIs report directly to the US IRS.

Global Intermediary Identification Number (GIIN)

A unique 19-character identification string proving a Financial Institution's registration with the US IRS. It includes a unique sequence and indicates the institution's role and country.

US Person Definition

A US Person includes citizens and residents, like green card holders and passport holders.

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FATCA Classification

Specifies the type of financial institution based on its business activities and ownership. Includes categories like US entities, foreign financial institutions (FFIs), and non-financial foreign entities (NFFEs).

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IRS Form W-9

A form required by the US IRS to report tax information on US-sourced income. Often used by US entities and individuals reporting income to the IRS.

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Passive Income

Income earned without active participation in the business, such as dividends, interest, rents, or royalties.

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FATCA Compliance Issues

Common issues include missing FATCA forms, incorrect classifications, and insufficient documentation for US TIN. These can lead to compliance issues and penalties.

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FATCA Classification Based on Activities

The specific business activities and services offered by an entity determine its classification in FATCA. This can range from a US entity to a non-financial foreign entity.

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FATCA Classification Based on Legal Documents

Reviewing legal documents like Articles of Incorporation is important for determining the FATCA classification of an entity. This helps to ensure accurate compliance.

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Entity Roles in FATCA

Understanding the different roles of entities within FATCA is crucial for avoiding misclassifications and ensuring compliance. This helps avoid penalties and maintain lawful operations.

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Reporting Financial Institution (RFI)

A financial institution responsible for collecting and reporting account information of foreign accounts to the US IRS. This ensures US tax compliance.

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Foreign Financial Institution (FFI)

A financial institution that holds foreign accounts. These institutions are subject to FATCA reporting and compliance requirements.

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Non-Financial Foreign Entity (NFFE)

A foreign entity not primarily involved in financial activities and not subject to FATCA reporting requirements. Examples include retailers, manufacturers, or utility companies.

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Specified US Entity

A US entity that is subject to specific FATCA reporting requirements.

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US TIN (Tax Identification Number)

A tax identification number used by the US IRS to track individuals and entities for tax purposes. Similar to a Social Security Number (SSN) for individuals.

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FATCA Compliance Review

The process of reviewing and verifying that an entity complies with FATCA regulations and requirements.

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FATCA Compliance Obligation

The obligation for entities to provide accurate information and follow FATCA requirements to avoid penalties and maintain lawful operations.

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FATCA Compliance Activities

The process of ensuring that an entity's activities and transactions comply with FATCA regulations. This involves accurate reporting and documentation.

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FATCA Reporting Deadline

The date by which an entity must provide FATCA-related information to the US Internal Revenue Service.

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FATCA Reporting

The process of collecting and reporting information about foreign accounts to the US IRS. This helps the IRS track and enforce tax compliance on overseas accounts.

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FATCA Regulations

The specific requirements and rules set forth by FATCA for reporting and compliance by different types of entities.

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Foreign Account Tax Compliance Act (FATCA)

The US law designed to prevent tax evasion by US citizens and residents with offshore accounts. It requires foreign financial institutions to report account information to the US IRS.

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US IRS

The US Internal Revenue Service, responsible for collecting federal taxes, enforcing tax laws, and administering FATCA.

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Study Notes

Management

  • Involves investing, administering, or managing funds on behalf of others.
  • BPI offers various financial services: BPI Direct, Banko, BPI Wealth, BPI Capital.

Intergovernmental Agreement (IGA)

  • An agreement between a jurisdiction and the US to facilitate FATCA implementation.
  • Simplifies reporting and compliance obligations for Financial Institutions (FFIs).
  • Two models:
    • Model I: FFIs report to local authorities, which then report to the US IRS (e.g., UK, Canada, Philippines).
    • Model II: FFIs report directly to the US IRS (e.g., Hong Kong, Japan).

Global Intermediary Identification Number (GIIN)

  • A 19-character identification string proving a Financial Institution's registration with the US IRS.
  • System-generated first 13 characters; the subsequent characters indicate the FFI's role (e.g., Lead Entity, Branch).
  • The last three digits signify the institution’s country of tax residence.

FFIs Registered with the US IRS

  • GIINs are assigned to various institutions like Bank of the Philippine Islands and BDO Unibank.
  • Incorrect FATCA classifications can lead to non-compliance issues.

FATCA Classification – US Person Definition

  • A US Person includes residents and citizens, such as passport holders and green card holders.
  • Certain documentation needed for clients with US indicia living abroad.

Financial Institution Classification Requirements

  • Entities must provide specific documents based on their FATCA classification (e.g., IRS Form W-9 for US entities).
  • Different classifications include Specified US Entity, Non-Financial Foreign Entity (NFFE), and Foreign Financial Institution (FFI).

Passive Income Definition

  • Passive income includes dividends, interest, rents, royalties, and gains from asset transactions.
  • Categorization affects FATCA classification for entities.

Issues Noted During FATCA Compliance Review

  • Common issues include missing FATCA forms, incorrect classifications, and inadequate documentation for US TIN.
  • Compliance is critical for maintaining lawful operations among various entities.

Activity Outcomes on FATCA Classification

  • Entities evaluated range from Mercury Drug (NFFE Active) to JP Morgan and Chase Co (US Entity Others).
  • Classification depends on the nature and engagement of the entity in business activities or services.

Additional Compliance Activities

  • Assessments require reviewing Articles of Incorporation to determine FATCA classification.
  • Understanding entity roles within FATCA prevents erroneous classifications and compliance issues.

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Description

Test your knowledge on the principles and practices of managing funds and investments. This quiz covers various strategies and examples in the realm of financial management, helping you understand how to invest and administer funds effectively.

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