Section 273 — Income Tax Act: Due diligence for preexisting individual accounts

A preexisting individual account that is a cash value insurance contract or an annuity contract is not required to be reviewed, identified or reported, if the reporting financial institution is effectively prevented by law from selling those contracts to residents of a reportable jurisdiction. The following review procedures apply with respect to lower value accounts that are preexisting individual accounts: if the reporting financial institution has in its records the address of the individual account holder’s current residence (in this section, their current residence address ) based on documentary evidence, the reporting financial institution may treat the individual account holder as being a resident for tax purposes of the jurisdiction in which the address is located for purposes of determining whether the individual account holder is a reportable person; if the reporting financial institution does not rely on a current residence address for the individual account holder based on documentary evidence as described in paragraph (a), the reporting financial institution must review electronically searchable data maintained by the reporting financial institution for any of the following indicia and apply paragraphs (c) to (f): identification of the account holder as a resident of a reportable jurisdiction, current mailing or residence address (including post office box) in a reportable jurisdiction, one or more telephone numbers in a reportable jurisdiction and no telephone number in the jurisdiction of the reporting financial institution, standing instructions (other than with respect to a depository account) to transfer funds to an account maintained in a reportable jurisdiction, currently effective power of attorney or signatory authority granted to a person with an address in a reportable jurisdiction, and a hold mail instruction or in-care-of address in a reportable jurisdiction if the reporting financial institution does not have any other address on file for the account holder; if none of the indicia listed in paragraph (b) are discovered in the electronic search, then no further review is required until the earlier of a change in circumstances that results in one or more of the indicia referred to in paragraph (b) being associated with the account, and the account becoming a high value account; if any of the indicia listed in subparagraphs (b)(i) to (v) are discovered in the electronic search or if there is a change in circumstances that results in one or more of the indicia in paragraph (b) being associated with the account, then the reporting financial institution must treat the account holder as a resident for tax purposes of each reportable jurisdiction for which an indicium is identified, unless one of the exceptions in paragraph (f) applies with respect to that account; if a hold mail instruction or in-care-of address in a reportable jurisdiction is discovered in the electronic search and no other address and none of the other indicia listed in subparagraphs (b)(i) to (v) are identified for the account holder, then the reporting financial institution must do one (if the relevant information is obtained) or both (in the order most appropriate to the circumstances) of the following: apply the paper record search described in paragraph (3)(b), and seek to obtain from the account holder a self-certification or documentary evidence to establish the residence for tax purposes of the account holder, and if the paper record search referred to in clause (i)(A) fails to establish an indicium and the attempt to obtain the self-certification or documentary evidence referred to in clause (i)(B) is not successful, then the reporting financial institution must report the account as an undocumented account; and notwithstanding the discovery of indicia under paragraph (b), a reporting financial institution is not required to treat an account holder as a resident of a reportable jurisdiction if both the account holder information contains a current mailing or residence address in the reportable jurisdiction, one or more telephone numbers in the reportable jurisdiction (and no telephone number in the jurisdiction of the reporting financial institution), or standing instructions (with respect to financial accounts other than depository accounts) to transfer funds to an account maintained in a reportable jurisdiction, and the reporting financial institution obtains, or has previously reviewed and currently maintains a record of, a self-certification from the account holder of the jurisdictions of residence of the account holder that does not include the reportable jurisdiction, and documentary evidence establishing the account holder’s non-reportable status in relation to that jurisdiction, or both the account holder information contains a currently effective power of attorney or signatory authority granted to a person with an address in the reportable jurisdiction, and the reporting financial institution obtains, or has previously reviewed and currently maintains a record of, a self-certification from the account holder of the jurisdictions of residence of the account holder that does not include the reportable jurisdiction, or documentary evidence establishing the account holder’s non-reportable status in relation to that jurisdiction. The following enhanced review procedures apply with respect to high value accounts that are preexisting individual accounts: the reporting financial institution must review electronically searchable data maintained by the reporting financial institution for any of the indicia described in paragraph (2)(b); subject to paragraph (c), the reporting financial institution must review for any of the indicia described in paragraph (2)(b) the current customer master file, and the following documents associated with the account, and obtained by the reporting financial institution within the last five years, to the extent that they are not contained in the current customer master file: the most recent documentary evidence collected with respect to the account, the most recent account opening contract or documentation, the most recent documentation obtained by the reporting financial institution in accordance with AML/KYC procedures or for other regulatory purposes, any power of attorney or signature authority forms currently in effect, and any standing instructions (other than with respect to a depository account) to transfer funds currently in effect; a reporting financial institution is not required to perform the paper record search described in paragraph (b) to the extent that the reporting financial institution’s electronically searchable information includes the following: the account holder’s residence status, the account holder’s residence address and mailing address currently on file with the reporting financial institution, the account holder’s telephone number currently on file, if any, with the reporting financial institution, in the case of financial accounts other than depository accounts, whether there are standing instructions to transfer funds in the account to another account (including an account at another branch of the reporting financial institution or at another financial institution), whether there is a hold mail instruction or current in-care-of address for the account holder, and whether there is any power of attorney or signatory authority for the account; in addition to the electronic and paper record searches described in paragraphs (a) to (c), the reporting financial institution must treat as a reportable account any high value account assigned to a relationship manager (including any financial accounts aggregated with that high value account under section 277) if the relationship manager has actual knowledge that the account holder is a reportable person; with respect to the enhanced review of high value accounts described in paragraphs (a) to (d), if none of the indicia listed in paragraph (2)(b) are discovered in the enhanced review and the account is not identified as being held by a reportable person in paragraph (d), then further action is not required until there is a change in circumstances that results in one or more indicia being associated with the account, if any of the indicia listed in subparagraphs (2)(b)(i) through (v) are discovered in the enhanced review, or if there is a subsequent change in circumstances that results in one or more indicia being associated with the account, then the reporting financial institution must treat the account as a reportable account with respect to each reportable jurisdiction for which an indicium is identified unless one of the exceptions in paragraph (2)(f) applies with respect to that account, and if a hold mail instruction or in-care-of address is discovered in the enhanced review and no other address or other indicia listed in subparagraphs (2)(b)(i) to (v) are identified for the account holder, then the reporting financial institution must obtain from the account holder a self-certification or documentary evidence to establish the residence for tax purposes of the account holder, and if the reporting financial institution cannot obtain a self-certification or documentary evidence, report the account as an undocumented account; if a preexisting individual account is not a high value account on June 30, 2017, but becomes a high value account as of the last day of a subsequent calendar year, the reporting financial institution must complete the enhanced review procedures described in this subsection with respect to the account within the calendar year following the year in which the account becomes a high value account, and if the account is identified as a reportable account based on the review in subparagraph (i), the reporting financial institution must report the required information about the account with respect to the year in which it is identified as a reportable account (and subsequent years on an annual basis, unless the account holder ceases to be a reportable person); if a reporting financial institution applies the enhanced review procedures described in this subsection to a high value account in a year, then the reporting financial institution is not required to reapply those procedures – other than the relationship manager inquiry described in paragraph (d) – to the same high value account in any subsequent year unless the account is undocumented, in which case the reporting financial institution must re-apply them annually until the account ceases to be undocumented; if there is a change of circumstances with respect to a high value account that results in one or more indicia described in paragraph (2)(b) being associated with the account, then the reporting financial institution must treat the account as a reportable account with respect to each reportable jurisdiction for which an indicium is identified unless one of the exceptions in paragraph (2)(f) applies with respect to that account; and a reporting financial institution must implement procedures to ensure that a relationship manager identifies any change in circumstances of an account. Each preexisting individual account must be reviewed in accordance with subsection (2) or (3) before 2019, if the account is a high value account; or 2020, if the account is a lower value account. Any preexisting individual account that has been identified as a reportable account under this section must be treated as a reportable account in all subsequent years, unless the account holder ceases to be a reportable person.