FATCA for EU e-money institutions — the Model 1 IGA
FATCA is the one automatic-exchange regime a European e-money institution can be inside without knowingly dealing with a single United States person. The obligation does not arrive from Washington. It arrives through the intergovernmental agreement your Member State signed and the national law implementing it — which is why the practical questions are about thresholds, indicia and elections rather than US tax law.
1. How the Model 1 route actually works
Nearly every EU Member State operates a Model 1 intergovernmental agreement. Under it, a reporting financial institution does not file with the United States at all: it reports on its US reportable accounts to its own national tax authority, which automatically exchanges the data with the US Competent Authority. An institution that complies with its reporting and registration obligations under the agreement is treated as complying with section 1471 of the US Internal Revenue Code, and escapes the withholding regime unless the IRS treats it as a non-participating financial institution.
Three consequences follow:
- Your counterparty is your national tax administration, not the IRS. Filing format, portal, deadline and penalties are national.
- Registration is still a US-side act. An institution treated as a reporting financial institution under a Model 1 agreement registers with the IRS as a registered deemed-compliant foreign financial institution and obtains a Global Intermediary Identification Number.
- Failure is measured as “significant non-compliance” under Article 5(2) or 5(3) of the agreement — determined by the US Competent Authority and routed through your own authority.
2. Whether an e-money institution is in scope
FATCA scope turns on two questions in sequence: is the entity a financial institution, and does it maintain financial accounts. For an issuer of electronic money the balance a customer holds is the thing to classify, and in practice it is examined against the depository account concept, under the implementing law of the jurisdiction whose agreement applies. Do that analysis in writing, because the same balance is now unambiguously in scope for the parallel OECD regime: from 1 January 2026 an entity holding e-money is a Depository Institution for CRS purposes. A firm that concluded years ago it was outside both should revisit the FATCA half.
3. The thresholds that decide how many accounts you review
Annex I to the Model 1 agreement holds the due diligence rules, and its exemptions are what make FATCA tractable for a mass-market payments book. Amounts are in US dollars, read to include the equivalent in other currencies. Most exemptions are elective: they apply unless the institution elects otherwise, and only where the partner jurisdiction’s implementing rules provide for the election.
| Account population | Threshold | Consequence |
|---|---|---|
| Pre-existing individual | Not exceeding $50,000 at the determination date | No review, identification or reporting |
| Pre-existing depository | Balance of $50,000 or less | No review, identification or reporting |
| Lower value | Above $50,000, up to $1,000,000 | Electronic record search for US indicia |
| High value | Over $1,000,000 at the determination date or any later 31 December | Paper search and relationship-manager inquiry |
| New individual depository | Exempt unless it exceeds $50,000 at any calendar year end | No review while below the line |
| Pre-existing entity | Not exceeding $250,000 | Exempt until it exceeds $1,000,000 |
| New entity | Procedures prevent a balance over $50,000 | No review, identification or reporting |
Two aggregation rules govern how those numbers are computed. Accounts are aggregated across the institution and related entities only to the extent that computerised systems link them by a data element such as client number or taxpayer identification number and allow balances to be aggregated — so the reach of your customer key defines the reach of the threshold. And each holder of a joint account is attributed the entire balance.
4. The seven US indicia, and what triggers the harder search
For lower value accounts the review is an electronic search of the institution’s own searchable data for: identification of the holder as a US citizen or resident; an unambiguous indication of a US place of birth; a current US mailing or residence address, including a US post office box; a current US telephone number; standing instructions to transfer funds to an account in the United States; a currently effective power of attorney or signatory authority granted to a person with a US address; or an in-care-of or hold-mail address that is the sole address on file. For a lower value account, a non-US in-care-of address or a hold-mail address is not US indicia.
If nothing is found, no further action is required until a change in circumstances, or until the account becomes a high value account. High value accounts additionally require review of the customer master file and, where the databases do not hold the information, of documents obtained in the last five years — documentary evidence, account-opening documentation, AML and KYC documentation, powers of attorney and standing transfer instructions. That paper search falls away entirely if the searchable data already contain six specified elements, among them nationality or residence status, current residence and mailing address, and whether an in-care-of or hold-mail address exists. There is also a knowledge overlay: a high value account assigned to a relationship manager is reportable if that manager has actual knowledge that the holder is a specified US person.
5. Worked example: sizing the reviewable population
Facts: an e-money institution holds 900,000 wallets; fewer than 4,000 have ever exceeded $50,000 equivalent. Its core system links a customer’s wallets by one customer number and can sum them.
Which rule applies: the Annex I exemption for depository accounts of $50,000 or less, subject to the election, plus the aggregation rule requiring linked accounts to be summed.
What the practitioner does: documents the election, computes balances at customer-number level rather than wallet level, and produces a dated population report showing which accounts cross the line at the determination date and at each year-end. Outcome: the review population is the low thousands, not the high hundreds of thousands — but only because the aggregation is evidenced. An institution that cannot show how it aggregated has no defensible basis for the exemption, and a firm whose systems do link wallets cannot pretend they do not.
6. Worked example: one telephone number
Facts: a customer with a $61,000 balance has a French residence address, a French identity document, and a mobile number with a +1 country code recorded as their current contact number.
Which rule applies: the account is a lower value account, so the electronic record search applies, and a current US telephone number is one of the seven indicia.
What the practitioner does: treats the account as a US reportable account unless it elects the Annex I cure procedure and one of its exceptions is satisfied on the documentation obtained. Outcome: a single contact field, captured for two-factor authentication rather than for tax, is what puts the account into the return — which is why the search must run against the fields the business actually uses, and why a data dictionary mapping every stored telephone, address and power-of-attorney field to the seven indicia is the artefact to build first.
7. Missing US TINs: the relief that runs to 2027
The obligation is to report the US TIN of each specified US person who is an account holder and, for a non-US entity with specified US persons as controlling persons, of each such controlling person. Institutions frequently cannot obtain it. Notice 2023-11 created temporary relief and Notice 2024-78 extended it: an institution in an eligible jurisdiction that follows the procedures will not be found in significant non-compliance solely for failing to report US TINs on pre-existing accounts, for 2025, 2026 and 2027.
The conditions are specific. For each US reportable account with a missing required TIN the institution must obtain and report the date of birth of each individual holder and controlling person whose TIN is not reported; annually request the missing TIN; annually search its own electronically searchable data for it; report an accurate TIN code; report a foreign taxpayer identification number where its searchable data hold one; and report the city and country of residence using the AddressFix element. The annual request must use the channel most likely to reach the holder and must include either the web address of the State Department’s joint FATCA FAQs, or a copy of those FAQs together with the IRS relief procedures for certain former citizens or the web address for them. Evidence of the policies and of their execution must be retained until the end of 2031.
Two limits are easy to miss. The relief covers pre-existing accounts only — not accounts opened after the determination date, including new accounts of existing customers. And it is jurisdiction-conditional: within nine months of the year end the Member State must make good faith efforts, including encouraging resident US citizens to provide TINs and enforcing against institutions the US authority flags.
8. Worked example: the annual request as a control
Facts: an institution has 140 pre-existing accounts with US indicia and no TIN, and sends a generic annual message asking customers to update their tax details.
What the practitioner does: rewrites the message to carry the joint FATCA FAQs link, logs per-account send events and channel choice, runs the electronic re-search on a fixed annual date, and stores the package under a 2031 retention rule. Outcome: the difference between relief and no relief is documentary — the same 140 accounts either sit inside a defensible procedure or outside one.
9. FAQ
Do we report to the IRS or to our own tax authority?
Under a Model 1 agreement, to your own national tax authority, which exchanges the data with the US Competent Authority. You still register with the IRS for a Global Intermediary Identification Number.
Is a small e-money balance reportable?
Frequently not. Annex I exempts pre-existing depository accounts with a balance of $50,000 or less, and new individual depository accounts unless the balance exceeds $50,000 at the end of any calendar year — but the exemptions are elective and depend on the national implementing rules providing for the election.
How far do we have to aggregate balances?
Only so far as your computerised systems link the accounts by a data element such as client number or taxpayer identification number and allow balances to be summed. Each joint holder is attributed the entire balance.
What if we cannot get a customer’s US TIN?
Notice 2024-78 gives relief on pre-existing accounts for 2025–2027 if you meet six conditions, including date of birth, an accurate TIN code, the AddressFix city and country, and an annual request in prescribed form — records kept to end-2031.
Is FATCA the same review as CRS?
Structurally similar, not identical: the indicia lists, thresholds and cure procedures differ. Build one due diligence engine with two rule sets, not two engines.
10. What to do, today
- Write down your classification — financial institution status and account type — against the implementing law of the agreement that applies, and re-test it against the 2026 CRS e-money position.
- Confirm in the national rules whether the Annex I elections are available, and record which ones you have taken.
- Map every stored address, telephone, place-of-birth, power-of-attorney and standing-instruction field to the seven indicia, and run the search against that map.
- Prove your aggregation: one dated population report at customer-key level, reproducible for any past year-end.
- If you rely on the TIN relief, treat all six conditions as evidenced controls and set retention to end-2031.
Related: CRS for EMIs · DAC8 · CARF · DAC7
