FATCA “Full Form” in Banking: What It Is & Why It Matters

FATCA’s full form is the “Foreign Account Tax Compliance Act” and it’s a reporting requirement imposed on non-US banking institutions with US clients.

In other words, FATCA reporting will be necessary anytime a US person establishes ties with financial institutions outside of the United States.

In this article, we’ll be taking a look at FATCA from the perspective of Indian clients. More specifically, we’ll be discussing NRIs with financial accounts in India and elsewhere.

You can also access our other free banking resources ranging from the best NRI accounts to opening foreign bank accounts for US citizens and residents by clicking the link above.

Feel free to use the table of contents to jump ahead to the sections most relevant to you.

Table of Contents

  1. FATCA Full Form in Banking
  2. Foreign Account Tax Compliance Act
  3. Frequently Asked Questions
  4. Ready to Explore Your Options?

FATCA Full Form in Banking

FATCA’s full form in banking is the “Foreign Account Tax Compliance Act”. FATCA requires foreign financial institutions (FFIs) to report assets held by US persons outside of the United States. Importantly, US persons include both US citizens and foreign US residents, such as non-resident Indians (NRIs). 

Additionally, within the same package of legislation (the “HIRE” Act), the US government passed legislation requiring US persons to report their foreign financial accounts over certain thresholds. This is known as the FBAR filing requirements, which you can learn more about using the link above.

Now, thanks to FATCA and FBAR filing, the US government can ensure that foreign financial accounts of US persons are being reported. And, since the reporting is coming from two distinct sources, the account information can be corroborated, essentially forcing both the individual account holder to report their accounts along with the foreign banks to report accounts (FFIs), ensuring accurate reporting.

So, if you are an NRI with US residency, you are required to report your foreign financial accounts through an FBAR filing. Fortunately, the filing can be completed online through the BSA e-filing system.

Likewise, NRIs with US residency should know that their foreign financial accounts (whether held in India or elsewhere abroad) are reportable to the US government through FATCA.

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Foreign Account Tax Compliance Act

When FATCA was first introduced, it made opening international bank accounts as a US person much more challenging.

But, as foreign banks became more familiar with the related reporting and compliance teams became more proficient in their systems, those challenges started to slowly disappear.

That said, it is still difficult to open bank accounts as a US person, and in certain instances, you do need to jump through specific hoops. But, it is possible to do so, both for US citizens and US residents.

However, there is still confusion around FATCA, who it applies to, and who actually needs to take action. So, we’ll look at the filing requirements of FATCA below, followed by several frequent questions in the next section of the article.

Who Needs to File With FATCA?

Foreign financial institutions are responsible for filing with FATCA. This includes banks, brokerage firms, and other non-financial foreign entities that have accounts for US persons.

So, the individual US person does not have a responsibility to file with FATCA since the financial institution will do it automatically on their behalf. That said, the individual account holders need to complete documentation with the financial institution and they will have to file an FBAR through the BSA efiling system.

FATCA Full Form in Banking Applies to

  • US citizens
  • US residents
  • Green card holders
  • Anyone working in the US with an applicable visa

Frequently Asked Questions

Below are three of the most common questions that we receive from people looking into the FATCA full form in banking. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.

What Does FATCA Mean for Banks?

FATCA means that foreign banks need to report the financial accounts of US persons. That said, FATCA does not only apply to foreign banks, it applies to any financial institution and certain non-financial entities where US persons have financial accounts.

Is FATCA Only for US Citizens?

No, FATCA is not only for US citizens. Instead, FATCA applies to any US person, including US citizens, foreign residents, green card holders, and individuals working in the US with an applicable visa.

Who Is a US Person Under FATCA?

Under FATCA, a US person includes US citizen, a foreign resident of the United States, a US green card holder, or a holder of certain US visas for work purposes. In other words, anyone who resides in the US or is a US citizen falls under the purview of FATCA and FBAR filing requirements.

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GlobalBanks Team
GlobalBanks Team

The GlobalBanks editorial team comprises a group of subject-matter experts from across the banking world, including former bankers, analysts, investors, and entrepreneurs. All have in-depth knowledge and experience in various aspects of international banking. In particular, they have expertise in banking for foreigners, non-residents, and both foreign and offshore companies.

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