These rules would add a transition period (until 1 January 2016) to the expanded affiliated group requirement to comply with FATCA.
The rules previously required that each FFI in an expanded affiliate group needed to sign up either as a participating or deemed compliant FFI (or be otherwise exempt) for FFIs within the group to be in compliance – meaning none could participate if even one affiliate could not satisfy the requirement.
The new rules provide additional time for affiliates or branches that are in restricted countries to enter into agreements. However, restricted FFIs or branches must still conduct due diligence with respect to their accounts and must comply with the FATCA requirements to the extent possible under local law.
Additionally, if they receive “withholdable” payments, they will be subject to withholding during this transition period.