The Foreign Account Tax Compliance Act (FATCA), which was passed as part of the HIRE Act in the United States, generally requires that a Foreign Financial Institution (“FFI”) report on the foreign assets held by their US account holders or be subject to withholding payments.  An investment fund is classified as a FFI as it takes deposits from customers (investors).

While FATCA is a United States initiative, Common Reporting Standard (CRS) emerged for the automatic exchange of financial account information between tax administrations to use in fighting tax evasion and to promote voluntary compliance with tax laws. Canada and close to a hundred other jurisdictions are committed to its implementation.

Given the complexities regarding inter-governmental filing requirements, Pinnacle can help you determine your responsibilities and filing obligations.

• Collection of investor tax residency and self-certification documentation.
• Classification of investors under applicable FATCA and CRS regimes.
• Identifying and reviewing investor indicia (e.g., tax residency indicators) and obtaining appropriate documentation or remediation where required under FATCA/CRS.
• Ongoing monitoring of changes in investor circumstances.
• Validation of investor information against applicable registries (e.g., GIIN lists).
• Annual filing with Fund’s respective regulatory jurisdiction to ensure compliance.

Pinnacle provides full AML services for all jurisdictions. We have developed a comprehensive AML procedures framework which, when followed, ensures that funds are in compliance with the relevant regulations.  The AML framework is reviewed and tested annually through an independent compliance audit.  Our AML framework consists of two components: Customer Due Diligence and Investor Assessments.

Customer Due Diligence

Pinnacle obtains ‘customer information’ for all investors, in accordance with applicable regulations.  Such information is dependent on the type of investor, but in all circumstances will entail the following:

• Identifying the beneficial owner and in the case of entities, identifying any beneficial owner, above the applicable threshold, of the entity’s capital structure.
• Ensuring all documentation received meets applicable certification and regulatory requirements.
• Coordinating directly with investors to obtain required documentation in the prescribed format.

Investor Assessments

All investors may need to be assessed for risk and documented accordingly.  The current standard is setting a level of High, Medium or Low, which replaces the “standard / non-standard” approach.

Politically Exposed Persons (PEPs) will be identified and assessed as high risk, with enhanced due diligence procedures performed.

Specific AML services:

• A risk-based approach to AML issues.
• Proactive follow up with investors on an individual basis.
• Dedicated and experienced AML experts and MLRO dealing with investor compliance.
• Maintenance of AML records in accordance with applicable regulatory requirements.
• Technology restrictions to block certain investor transactions when compliance levels have not been met.
• Workflow management including maker / checker rules.
• Identifying source of funds and matching to investor details.
• Sanctions, PEP and prohibited investor screening at onboarding and on an ongoing basis.
• Ongoing monitoring of investor profiles and documentation updates.
• Escalation of identified risks, suspicious activity or exceptions to the Fund’s designated parties.

See how Pinnacle delivers comprehensive AML and investor compliance services designed to protect funds, streamline onboarding, and support regulatory compliance globally:

Depending on the regulatory requirements of your fund and jurisdiction, Pinnacle’s compliance specialists can ensure you are on side and in compliance will all applicable laws and covenants.

• Form PF services.
• Euro Alternative Investment Fund Managers Directive services (“AIFMD”).
• Money Laundering Reporting Officer services.
• Portfolio limit and concentration restrictions monitoring services.
• Risk management reporting.
• Portfolio exposure and counterparty reporting.
• Form 1099 filing services.

Pinnacle helps support efficient and accurate tax reportings:

• Preparation and provision of accounting and investor data to support tax reporting.
• Collection and maintenance of investor tax documentation (e.g., W-8, W-9 forms).
• Calculation support for withholding amounts based on methodologies provided by the fund or its advisors.
• Tracking and reporting of tax-related data in the fund’s books and records.
• Coordination with external tax advisors and service providers.