The Internal Revenue Service and the U.S. Treasury Department recently released amendments to the final FATCA regulations, in part so as to provide better coordination with the intergovernmental agreements (IGAs). Under these amendments, which are expected to be effective as of March 6, 2014, financial institutions (FIs) which are FIs under FATCA solely by virtue of being “investment entities” but which do not maintain financial accounts are referred to as "certified deemed compliant FIs."

This new deemed compliance category essentially targets investment advisors and managers who do not maintain financial accounts for their clients.

Consequently, for the purposes of the FATCA legislation and under the Canada-US IGA, such "certified deemed compliant FIs" should not be required to register with the IRS for FATCA purposes.

While certified deemed compliant FIs are not required to register with the IRS, certain identification requirements would still apply to ensure no withholding is made on US-source payments that they will receive. We expect further clarification will be made by the IRS regarding such identification requirements.