Egyptian Financial Supervisory Authority (EFSA)

Chairman of the Board of Directors

Circular No. (1) of 2014

Dated 1/1/2014

Regarding the Regulation of Procedures for Implementing

the US Tax Compliance Law (FATCA) Concerning Accounts of Americans Dealing with Entities Operating in the Non-Banking Financial Markets

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Introduction:

In the context of the Egyptian Financial Supervisory Authority's commitment to fulfilling its mandated role, and in light of the United States government's issuance of the Tax Compliance Law (FATCA), which requires US citizens holding financial assets outside US territory to report details of those assets to the US Internal Revenue Service (IRS), as well as the provisions of that law obligating foreign (non-US) financial institutions to report accounts held by US persons when they interact with them. In coordination with the Central Bank of Egypt regarding the implementation of that law, and in preparation for the issuance of regulatory decisions concerning the coordination mechanism between the Arab Republic of Egypt and the United States of America regarding financial institution clients who are US persons, it has become imperative for the Authority to keep pace with this by directing the non-banking financial institutions under its supervision through two parallel axes:

• The first: An awareness campaign where the Authority introduces the law, its provisions, implementation mechanisms, and those bound by its provisions.
• The second: An operational axis where the Authority issues decisions and circulars to encourage companies under its supervision to take the necessary steps to align with the state's approach in implementing the US Tax Compliance Law.

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Therefore:

After reviewing Law No. 10 of 2009 and related and connected laws, we have decided to issue our circular as follows:

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(Article One)

For the purposes of applying the provisions of this circular, "financial institutions" refers to non-banking financial institutions subject to the supervision and oversight of the Egyptian Financial Supervisory Authority under Law No. 10 of 2009, which fall into one of the following categories:

• Securities brokerage companies
• Portfolio formation and management companies

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(Article Two)

For the purposes of the US Tax Compliance Law (FATCA), a "US person" refers to:

• A citizen holding both US and another nationality (dual citizen).
• A US citizen, whether residing inside or outside the United States.
• A holder of a US passport.
• A person born in the United States, unless they have renounced US citizenship.
• A lawful permanent resident of the United States (i.e., a Green Card holder).
• A person subject to the substantial presence test, defined as a non-US resident present in the United States for at least 183 days calculated across the current year, the immediately preceding year, or the second preceding year, and who is not a diplomat, lecturer, student, or athlete.
• Any corporation or domestic entity (within the United States of America).

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(Article Three)

The financial institutions referred to in Article One must comply with the following:

1. Include in their customer identification rules a statement indicating whether the customer is a US person (according to the definition in Article Two) or not, with implementation commencing for new customers from January 1, 2014.
2. Update the data of their existing customers in the same manner by no later than June 15, 2014.
3. Obtain from each customer – a US person – in both of the aforementioned cases a declaration confirming their non-objection to disclosing information related to the implementation of the US Tax Compliance Law provisions. In the event of any refusal, they shall be recorded in the financial institution's register of multiple accounts for this purpose, according to a plan to be issued by the Authority regarding such cases.

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(Article Four)

The financial institutions referred to in Article One must report to the Authority the balances of any of their customers (according to the definition in Article Two) exceeding fifty thousand US dollars or its equivalent in other currencies by no later than June 30, 2014, for the purpose of forwarding this information – through the unit concerned with the Arab Republic of Egypt – to the US Internal Revenue Service (IRS) under the US Department of the Treasury, in accordance with instructions to be issued by the Authority at that time on this matter.

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(Article Five)

This circular shall be published on the website of the Egyptian Financial Supervisory Authority and shall take effect from the day following its publication. Any financial institution referred to in Article One must notify the Authority in the event of its inability to properly implement the measures required to comply with this circular.

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Chairman of the Authority
Sherif Samy

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Smart Village, Building 15 - 84 B
Km 28, Cairo/Alexandria Desert Road
Giza Governorate, Postal Code: 12577

Telephone: 02-225370040
Fax: 02-225345222
Email: info@efsa.gov.eg
Website: www.efsa.gov.eg