(e) the NFE is not yet operating a business and has no prior operating history, but is investing capital into assets with the intent to operate a business other than that of a Financial Institution, provided that the NFE does not qualify for this exception after the date that is 24 months after the date of the initial organisation of the NFE;
(f) the NFE was not a Financial Institution in the past five (5) years, and is in the process of liquidating its assets or is reorganising with the intent to continue or recommence operations in a business other than that of a Financial Institution;
(g) the NFE primarily engages in financing and hedging transactions with, or for, Related Entities that are not Financial Institutions, and does not provide financing or hedging services to any Entity that is not a Related Entity, provided that the group of any such Related Entities is primarily engaged in a business other than that of a Financial Institution; or
(h) the NFE meets all of the following requirements:
(і) it is established and operated in its jurisdiction of residence exclusively for religious, charitable, scientific, artistic, cultural, athletic, or educational purposes; or it is established and operated in its jurisdiction of residence and it is a professional organisation, business league, chamber of commerce, labour organisation, agricultural or horticultural organisation, civic league or an organisation operated exclusively for the promotion of social welfare;
(ii) it is exempt from income tax in its jurisdiction of residence;
(iii) it has no shareholders or members who have a proprietary or beneficial interest in its income or assets;
(iv) the applicable laws of the NFE's jurisdiction of residence or the NFE's formation documents do not permit any income or assets of the NFE to be distributed to, or applied for the benefit of, a private person or non-charitable Entity other than pursuant to the conduct of the NFE's charitable activities, or as payment of reasonable compensation for services rendered, or as payment representing the fair market value of property which the NFE has purchased; and
(v) the applicable laws of the NFE's jurisdiction of residence or the NFE's formation documents require that, upon the NFE's liquidation or dissolution, all of its assets be distributed to a Governmental Entity or other non-profit organisation, or escheat to the government of the NFE's jurisdiction of residence or any political subdivision thereof.
E. Miscellaneous
1. The term «Account Holder» means the person listed or identified as the holder of a Financial Account by the Financial Institution that maintains the account. A person, other than a Financial Institution, holding a Financial Account for the benefit or account of another person as agent, custodian, nominee, signatory, investment advisor, or intermediary, is not treated as holding the account for purposes of this Directive, and such other person is treated as holding the account. In the case of a Cash Value Insurance Contract or an Annuity Contract, the Account Holder is any person entitled to access the Cash Value or change the beneficiary of the contract. If no person can access the Cash Value or change the beneficiary, the Account Holder is any person named as the owner in the contract and any person with a vested entitlement to payment under the terms of the contract. Upon the maturity of a Cash Value Insurance Contract or an Annuity Contract, each person entitled to receive a payment under the contract is treated as an Account Holder.
2. The term «AML/KYC Procedures» means the customer due diligence procedures of a Reporting Financial Institution pursuant to the anti-money laundering or similar requirements to which such Reporting Financial Institution is subject under the Acting Law of the AIFC and any legal act of the Republic of Kazakhstan.
3. The term «Entity» means a legal person or a legal arrangement, such as a corporation, partnership, trust, or foundation.
4. An Entity is a «Related Entity» of another Entity if (a) either Entity controls the other Entity; (b) the two Entities are under common control; or (c) the two Entities are Investment Entities described in subparagraph A(6)(b), are under common management, and such management fulfils the due diligence obligations of such Investment Entities. For this purpose control includes direct or indirect ownership of more than 50% of the vote and value in an Entity.
5. The term «TIN» means Taxpayer Identification Number (or functional equivalent in the absence of a Taxpayer Identification Number).
6. The term «Documentary Evidence» includes any of the following:
(a) a certificate of residence issued by an authorised government body (for example, a government or agency thereof, or a municipality) of the jurisdiction in which the payee claims to be a resident;
(b) with respect to an individual, any valid identification issued by an authorised government body (for example, a government or agency thereof, or a municipality), that includes the individual's name and is typically used for identification purposes;
(c) with respect to an Entity, any official documentation issued by an authorised government body (for example, a government or agency thereof, or a municipality) that includes the name of the Entity and either the address of its principal office in the jurisdiction in which it claims to be a resident or the jurisdiction in which the Entity was incorporated or organised;
(d) any audited financial statement, third-party credit report, bankruptcy filing, or securities regulator's report.
With respect to a Pre-existing Entity Account, Reporting Financial Institutions may use as Documentary Evidence any classification in the Reporting Financial Institution's records with respect to the Account Holder that was determined based on a standardised industry coding system, that was recorded by the Reporting Financial Institution consistent with its normal business practices for purposes of AML/KYC Procedures or another regulatory purposes (other than for tax purposes) and that was implemented by the Reporting Financial Institution prior to the date used to classify the Financial Account as a Pre-existing Account, provided that the Reporting Financial Institution does not know or does not have reason to know that such classification is incorrect or unreliable. The term «standardised industry coding system» means a coding system used to classify establishments by business type for purposes other than tax purposes.
SECTION IX: COMPLEMENTARY REPORTING AND DUE DILIGENCE RULES FOR FINANCIAL ACCOUNT INFORMATION
A. Change in circumstances
1. A «change in circumstances» includes any change that results in the addition of information relevant to a person's status or otherwise conflicts with such person's status. In addition, a change in circumstances includes any change or addition of information to the Account Holder's account (including the addition, substitution, or other change of an Account Holder) or any change or addition of information to any account associated with such account (applying the account aggregation rules described in subparagraphs C(1) through (3) of Section VII) if such change or addition of information affects the status of the Account Holder.
2. If a Reporting Financial Institution has relied on the residence address test described in subparagraph B(1) of Section III and there is a change in circumstances that causes the Reporting Financial Institution to know or have reason to know that the original Documentary Evidence (or other equivalent documentation) is incorrect or unreliable, the Reporting Financial Institution must, by the later of the last day of the relevant calendar year, or 90 calendar days following the notice or discovery of such change in circumstances, obtain a self-certification and new Documentary Evidence to establish the residence(s) for tax purposes of the Account Holder. If the Reporting Financial Institution cannot obtain the self-certification and new Documentary Evidence by such date, the Reporting Financial Institution must apply the electronic record search procedure described in subparagraphs B(2) through (6) of Section III.
B. Self-certification for New Entity Accounts
With respect to New Entity Accounts, for the purposes of determining whether a Controlling Person of a Passive NFE is a Reportable Person, a Reporting Financial Institution may only rely on a self-certification from either the Account Holder or the Controlling Person.
C. Residence of a Financial Institution
1. A Financial Institution is «resident» in a Participating Jurisdiction if it is subject to the jurisdiction of such Participating Jurisdiction in that the Participating Jurisdiction is able to enforce reporting by the Financial Institution).
2. In the case of a trust that is a Financial Institution (irrespective of whether it is resident for tax purposes in a Participating Jurisdiction), the trust is considered to be subject to the jurisdiction of a Participating Jurisdiction if one or more of its trustees are resident in such jurisdiction except if the trust reports all the information required to be reported under these Rules with respect to Reportable Accounts maintained by the trust to another Participating Jurisdiction because it is resident for tax purposes in such other jurisdiction.
3. Where a Financial Institution (other than a trust) does not have a residence for tax purposes (for example, because it is treated as fiscally transparent, or it is located in a jurisdiction that does not have an income tax), it is considered to be subject to the jurisdiction of a Participating Jurisdiction and it is, thus, a Participating Jurisdiction Financial Institution if:
(a) it is incorporated under the laws of the Participating Jurisdiction;
(b) it has its place of management (including effective management) in the Participating Jurisdiction; or
(c) it is subject to financial supervision in the Participating Jurisdiction.
4. Where a Financial Institution (other than a trust) is resident in two or more Participating Jurisdiction, such Financial Institution will be subject to the reporting and due diligence obligations of the Participating Jurisdiction in which it maintains the Financial Account(s).
D. Account maintained
1. In general, an account would be considered to be maintained by a Financial Institution as follows:
(a) in the case of a Custodial Account, by the Financial Institution that holds custody over the assets in the account (including a Financial Institution that holds assets in street name for an Account Holder in such institution);
(b) in the case of a Depository Account, by the Financial Institution that is obligated to make payments with respect to the account (excluding an agent of a Financial Institution regardless of whether such agent is a Financial Institution);
(c) in the case of any equity or debt interest in a Financial Institution that constitutes a Financial Account, by such Financial Institution;
(d) in the case of a Cash Value Insurance Contract or an Annuity Contract, by the Financial Institution that is obligated to make payments with respect to the contract.
E. Trusts that are Passive NFEs
1. An Entity such as a partnership, limited liability partnership or similar legal arrangement that has no residence for tax purposes, according to subparagraph D(3) of Section VIII, shall be treated as resident in the jurisdiction in which its place of effective management is situated. For these purposes, a legal person or a legal arrangement is considered «similar» to a partnership and a limited liability partnership where it is not treated as a taxable unit in a Participating Jurisdiction under the tax laws of such jurisdiction. However, in order to avoid duplicate reporting (given the wide scope of the term «Controlling Persons» in the case of trusts), a trust that is a Passive NFE may not be considered a similar legal arrangement.
F. Address of Entity's principal office
1. One of the requirements described in subparagraph E(6)(c) of Section VIII is that, with respect to an Entity, the official documentation includes either the address of the Entity's principal office in a jurisdiction in which it claims to be a resident or a jurisdiction in which the Entity was incorporated or organised. The address of the Entity's principal office is generally the place in which its place of effective management is situated.
2. The address of a Financial Institution with which the Entity maintains an account, a post office box, or an address used solely for mailing purposes is not the address of the Entity's principal office unless such address is the only address used by the Entity and appears as the Entity's registered address in the Entity's organisational documents.
3. An address that is provided subject to instructions to hold all mail to that address is not the address of the Entity's principal office.
SCHEDULE 1: ADDITIONAL DEFINITIONS
For purposes of the application of these Rules in the AIFC, unless the context indicates otherwise, the defined terms listed below shall have the corresponding meanings:
Reportable Jurisdictions means, in respect of any reporting period, the jurisdictions listed in this regard by the Competent Authority on its website on the final day of the reporting period.
Participating Jurisdictions means the jurisdictions listed in this regard by the Competent Authority on its website from time to time.
SCHEDULE 2: FINES LIMITS
Every Reporting Financial Institution which fails to comply with a duty or obligation imposed under the AIFC Common Reporting Standard Regulations is liable to the penalties set out in the table below:
Contravention | Fine limit (US$) |
An Account Holder provides a false self-certification to the Reporting Financial Institution. | 7,000 |
A Reporting Financial Institution provides a false self-certification. | 7,000 |
A Reporting Financial Institution fails to provide a valid self-certification for New Account. | 7,000 |
A Reporting Financial Institution knowingly or recklessly signs or otherwise positively affirms a false self-certification. | 7,000 |
A Reporting Financial Institution fails to keep records of the due diligence procedures performed under the AIFC Common Reporting Standard Rules, or fails to keep them for a period of six (6) years pursuant to the requirements of the AIFC Common Reporting Standard Rules. | 2,800 |
A Reporting Financial Institution fails to apply the due diligence procedures specified in Section II through to Section VII in the AIFC Common Reporting Standard Rules. | 7,000 |
A Reporting Financial Institution fails to report the information required to be reported in terms of the AIFC Common Reporting Standard Rules. | 2,800 |
A Reporting Financial Institution fails to report the information required to be reported in terms of the AIFC Common Reporting Standard Rules in a complete and accurate manner. | Minor non-compliance 280, plus US$28 for every day the failure continues up to a maximum fine of US$7,000 Significant non-compliance US$70,000 |
Penalties that remain outstanding for a period of longer than thirty (30) days, or a Reporting Financial Institution fails to perform an action ordered by the Relevant Authority for a period of longer than thirty (30) days, as the case may be, the Relevant Authority may serve further default notices in accordance with these Regulations on the said Reporting Financial Institution imposing with each successive notice double the amount of the said penalties, provided that each such successive note shall supersede the previous notice served on the Reporting Financial Institution for the same default but any payment made in respect of that previous notice shall be taken into account accordingly. | Double the amount of the previous fine, provided that such penalties for each contravention shall not exceed an aggregate amount of US$70,000 |
* A fine will be levied on each occurrence of a contravention of these Regulations and shall (if applicable) accumulate separately for each contravention.