Under FATCA rules, foreign financial institutions (FIs not operating in the US or FFIs) are required to report to the Internal Revenue Service (IRS) about any American client data with which they have direct or indirect contact.
In July 2012, the IRS issued the first model for an Intergovernmental Agreement (Model IGA) for complying with FATCA provisions. It followed up with the final FATCA regulations on January 17, 2013. The first regulatory compliance deadline for FFIs is January 2014.
FATCA covers various types of financial products (representing US and and non US-sourced income) as well as individual and entity accounts with specific requirements. The definition of a US client includes several classifications such as persons with US citizenship, US residents, and persons with a permanent permit to stay in the US.
Complying with FATCA may require significant efforts in terms of implementation, and investments and resources in 2013 and 2014 in operational processes, information systems, training and communication, and customer relationship management, as well as the compliance and tax functions.