Section 240 — Due diligence requirement

(1) An account shall be treated as a reportable account beginning as on the date it is identified as such pursuant to the due diligence procedure specified insub-rule (3) to sub-rule (8) and, unless otherwise provided, information with respect to a reportable account shall be reported annually in the calendar yearfollowing the calendar year to which the information relates.
(2) For the purpose of this rule,—
(a) "documentary evidence" includes any of the following:—(i) a certificate of residence issued by an authorised Government body, including a Government agency or a municipality, of the country orterritory in which the payee claims to be a resident;(ii) with respect to an individual, any valid identification issued by an authorized Government body, including a Government agency or amunicipality, that includes the individual's name and is particularly used for identification purposes;(iii) with respect to an entity, any official documentation issued by an authorized Government body, including a Government agency or amunicipality, which includes the name of the entity and either the address of its principal office in the country or territory in which it claims tobe a resident or the country or territory in which the entity was incorporated or organized;(iv) any financial statement, third-party credit report, bankruptcy filing, or a report of the Government agency regulating the securities market;(b) "high value account" means a pre-existing individual account with a balance or value that,—(i) in case of a U.S. reportable account, exceeds an amount equivalent to one million U.S. dollars as on the 30th June, 2014 or 31st December ofany subsequent year; and(ii) in case of other reportable account, exceeds an amount equivalent to one million U.S. dollars as on the 31st December, 2015 or 31st Decemberof any subsequent year;(c) "lower value account" means a pre-existing individual account with a balance or value that,—(i) in case of a U.S. reportable account, exceeds an amount equivalent to fifty thousand U.S. dollars but does not exceed an amount equivalent toone million U.S. dollars as on the 30th June, 2014; and(ii) in case of other reportable account, does not exceed an amount equivalent to one million U.S. dollars as on the 31st December, 2015;(d) "new account" means a financial account maintained by a reporting financial institution opened on or after,(i) in case of a U.S. reportable account, the 1st July, 2014; and(ii) in case of other reportable account, the 1st January, 2016 or, if the account is treated as a financial account solely by virtue of the amendmentsto the Common Reporting Standard, on or after 1st January, 2026;(e) "new entity account" means a new account held by one or more entities;
(f) "new individual account" means a new account held by one or more individuals;
(g) "other reportable account" means a reportable account which is not a U.S. reportable account;
(h) "pre-existing account" means a financial account maintained by a reporting financial institution as on,—(I) in case of a U.S. reportable account, the 30th June, 2014; and(II) in case of other reportable account, the 31st December, 2015 or, if the account is treated as a financial account solely by virtue of theamendments to the Common Reporting Standard, as of 31st December, 2025;(i) "pre-existing entity account" means a pre-existing account held by one or more entities;
(j) "pre-existing individual account" means a pre-existing account held by one or more individuals;
(k) where a balance or value threshold is to be determined at the end of a calendar year, the relevant balance or value shall be determined as on the last dayof the reporting period which ends with or within that calendar year.(3) The due diligence procedure for the purposes of identifying reportable accounts among pre-existing individual accounts shall be the following:—
(a) a pre-existing individual account is not required to be reviewed, identified or reported, if,—(i) in case of a U.S. reportable account,—(A) the balance or value as on the 30th June, 2014, does not exceed an amount equivalent to fifty thousand U.S. dollars, subject to sub-clause (vi) of clause (c) of this sub-rule; or(B) which is a cash value insurance contract or an annuity contract, the balance or value does not exceed an amount equivalent to twohundred and fifty thousand U.S. dollars as on the 30th June, 2014, subject to sub-clause (vi) of clause (c) of this sub-rule; or(C) which is a cash value insurance contract or an annuity contract, the reporting financial institution, under any other law for the timebeing in force in India or of the United States of America, is prevented from selling such contract to a person who is a resident of theUnited States of America;(ii) in case of other reportable account, which is a cash value insurance contract or an annuity contract, the reporting financial institution, underany other law for the time being in force in India, is prevented from selling such contract to a person who is not a resident of India for taxpurposes;(b) with respect to lower value accounts among pre-existing individual accounts the following procedures shall apply:—(i) the reporting financial institution must review electronically searchable data maintained by the reporting financial institution for any of thefollowing indicia, and apply provisions contained in sub-clauses (ii) to (v):—(A) identification of the account holder as a resident of any country or territory outside India for tax purposes or unambiguous indicationof a place of birth in the United States of America; or(B) current mailing or residence address (including a post office box) in any country or territory outside India; or(C) one or more telephone numbers in a country or territory outside India and no telephone number in India; or(D) in case of U.S. reportable account, any standing instructions to transfer funds to an account maintained in a country or territoryoutside India and in case of other reportable account, any standing instructions (other than with respect to a depository account) totransfer funds to an account maintained in a country or territory outside India; or(E) currently effective power of attorney or signatory authority granted to a person with an address in a country or territory outside India;or(F) a "hold mail" instruction or "in-care-of" address in a country or territory outside India if the reporting financial institution does nothave any other address on file for the account holder;
(ii) if none of the indicia listed in sub-clause (i) are discovered in the electronic search, then no further action is required until there is a change incircumstances which results in one or more indicia being associated with the account, or the account becomes a high value account;(iii) if any of the indicia listed in items (A) to (E) of sub-clause (i) are discovered in the electronic search, or if there is a change in circumstanceswhich results in one or more indicia being associated with the account, then the reporting financial institution shall treat the account holder asresident for tax purposes of each such country or territory for which an indicium is identified, unless it elects to apply sub-clause (v) and oneof the exceptions in the said sub-clause applies with respect to that account;(iv) if a "hold mail" instruction or "in-care-of" address is discovered in the electronic search and no other address and none of the other indicialisted in items (A) to (E) of sub-clause (i) are identified for the account holder, the reporting financial institution shall apply the paper recordsearch referred to in sub-clause (ii) of clause (c), or seek to obtain from the account holder a self-certification or documentary evidence toestablish the residence or residences for tax purposes of such account holder but if the paper search fails to establish an indicium and theattempt to obtain the self-certification or documentary evidence is not successful, the reporting financial institution shall report the account asan undocumented account;(v) irrespective of a finding of indicia under sub-clause (i), a reporting financial institution is not required to treat an account holder as a resident,for tax purposes,—(A) of United States of America if, the account holder's information unambiguously indicates a place of birth in the United States ofAmerica and the reporting financial institution obtains, or has previously reviewed and maintains a record of,—(I) a self-certification that the account holder is neither a citizen of the United States of America nor its resident for taxpurposes;(II) a passport or other Government issued identification evidencing the account holder's citizenship or nationality in a countryother than the United States of America; and(III) a copy of the account holder's certificate of loss of nationality of the United States of America or a reasonable explanation of—(1) the reason, the account holder does not have such a certificate despite relinquishing citizenship of the United Statesof America; or(2) the reason, the account holder did not obtain citizenship of the United States of America at birth;(B) of any country or territory outside India if, the account holder's information contains a current mailing or residence address in anycountry or territory outside India, one or more telephone numbers in any country or territory outside India (and no telephone numberin India) or standing instructions (with respect to financial accounts other than depository accounts) to transfer funds to an accountmaintained in any country or territory outside India, the reporting financial institution obtains, or has previously reviewed andmaintains a record of,—(I) a self-certification from the account holder of the country or territory or countries or territories of residence for tax purposesof such account holder that does not include any country or territory outside India; and(II) documentary evidence establishing the account holder's non-reportable status;(C) of any country or territory outside India if, the account holder's information contains a currently effective power of attorney orsignatory authority granted to a person with an address in a country or territory outside India, or one or more telephone numbers inany country or territory outside India (if an Indian telephone number in also associated with the account), the reporting financialinstitution obtains, or has previously reviewed and maintains a record of—(I) a self-certification from the account holder of the country or territory or countries or territories of residence of such accountholder that does not include any country or territory outside India; or(II) documentary evidence establishing the account holder's non-reportable status;(c) with respect to high value accounts among pre-existing individual accounts the following enhanced review procedures shall apply:—(i) the reporting financial institution must review electronically searchable data maintained by the reporting financial institution for any of theindicia described in sub-clause (i) of clause (b);(ii) if the reporting financial institution's electronically searchable databases do not capture all of the information referred to in sub-clause (iii) ofthis clause, then the reporting financial institution shall also review the current customer master file and, to the extent not contained in thecurrent customer master file, the following documents associated with the account and obtained by the reporting financial institution duringthe last five years for any of the indicia provided in sub-clause (i) of clause (b),—(A) the most recent documentary evidence collected with respect to the account;(B) the most recent account opening contract or documentation;(C) the most recent documentation obtained by the reporting financial institution pursuant to rules framed under the Prevention ofMoney-laundering Act, 2002 (15 of 2003) or any other law for the time being in force;(D) any power of attorney or signature authority forms currently in effect; and(E) in case of U.S. reportable account, any standing instructions to transfer funds currently in effect and in case of other reportableaccount any standing instructions (other than with respect to a depository account) to transfer funds currently in effect; but where the electronically searchable databases include fields for, and capture all the information referred to in sub-clause (iii) ofthis clause, then review of the customer master file and documents referred to above shall not be required;(iii) a reporting financial institution is not required to perform the paper record search referred in sub-clause (ii) of this clause to the extent thereporting financial institution's electronically searchable information includes the following:—(A) the account holder's residence status for tax purposes;(B) the account holder's residence address and mailing address currently on file with the reporting financial institution;(C) the account holder's telephone number or numbers currently on file, if any, with the reporting financial institution;(D) in the case of financial accounts other than depository accounts, whether there are standing instructions to transfer funds inthe account to another account (including an account at another branch of the reporting financial institution or anotherfinancial institution);(E) whether there is a current "in-care-of" address or "hold mail" instruction for the account holder; and(F) whether there is any power of attorney or signatory authority for the account;(iv) in addition to the electronic and paper record searches provided in sub-clauses (i) to (iii) of this clause, the reporting financial institution shalltreat as a reportable account any high value account assigned to a relationship manager (including any financial accounts aggregated with thathigh value account) if the relationship manager has actual knowledge that the account holder is a reportable person;(v) after application of review procedures specified in sub-clauses (i) to (iv) if,—
(A) none of the indicia referred to in sub-clause (i) of clause (b) are discovered, and the account is not identified as held by a reportableperson as per sub-clause (iv), then further action is not required until there is a change in circumstances which results in one or moreindicia being associated with the account;(B) any of the indicia referred to in items (A) to (E) of sub-clause (i) of clause (b) are discovered, or if there is a subsequent change incircumstances which results in one or more indicia being associated with the account, then the reporting financial institution shalltreat the account as a reportable account with respect to each country or territory outside India for which an indicium is identifiedunless it elects to apply sub-clause (v) of clause (b) and one of the exceptions in the said sub-clause applies with respect to thataccount;(C) a "hold mail" instruction or "in-care-of" address is discovered in the electronic search and no other address and none of the otherindicia referred to in items (A) to (E) of sub-clause (i) of clause (b) are identified for the account holder, the reporting financialinstitution shall obtain from such account holder a self-certification or documentary evidence to establish the residence or residencesfor tax purposes of the account holder but if the reporting financial institution cannot obtain such self-certification or documentaryevidence, it shall report the account as an undocumented account;(vi) if a pre-existing individual account is not a high value account as on the 30th June, 2014 (for U.S. reportable account), or as the case may be,31st December, 2015 (for other reportable account), but becomes a high value account as on the last day of year 2015 (for U.S. reportableaccount) or last day of any subsequent calendar year (for all reportable accounts), the reporting financial institution shall complete theenhanced review procedures specified in this clause with respect to such account within the calendar year following the year in which theaccount becomes a high value account and if based on such review the account is identified as a reportable account, the reporting financialinstitution shall report the required information about such account with respect to the year in which it is identified as a reportable account andsubsequent years on an annual basis, unless the account holder ceases to be a reportable person;(vii) once a reporting financial institution applies the enhanced review procedures specified in this clause to a high value account, the reportingfinancial institution is not required to re-apply such procedures, other than an inquiry by the relationship manager provided in sub-clause (iv),to the same high value account in any subsequent year unless the account is undocumented where the reporting financial institution shall re-apply them annually until such account ceases to be undocumented;(viii) if there is a change of circumstances with respect to a high value account which results in one or more indicia referred to in sub-clause (i) ofclause (b) being associated with the account, then the reporting financial institution must treat the account as a reportable account with respectto each such country or territory outside India for which an indicium is identified unless it elects to apply sub-clause (v) of clause (b) and oneof the exceptions in the said sub-clause applies with respect to that account;(ix) a reporting financial institution shall implement procedures to ensure that a relationship manager identifies any change in circumstances of anaccount and where the relationship manager is informed that the account holder has a new mailing address in any country or territory outsideIndia, the reporting financial institution is required to treat the new address as a change in circumstances and, if it elects to apply sub-clause (v)of clause (b), then it is required to obtain the appropriate documentation from the account holder;(d) review of pre-existing individual account,—(i) in case of a U.S. reportable account which is high value account as on the 30th June, 2014, shall be completed by the 31st December, 2015 andif based on this review such account is identified as a U.S. reportable account after the 31st December, 2014 and on or before the 31stDecember, 2015, the reporting financial institution is not required to report information about such account with respect to calendar year 2014,but shall report information about the account on an annual basis thereafter;(ii) in case of a U.S. reportable account which is low value account as on the 30th June, 2014, shall be completed by the 30th June, 2016 and incase of other reportable account which is high value account as on the 31st December, 2015, shall be completed by the 31st December, 2016;(iii) in case of other reportable account that is low value account as on the 31st December, 2015, must be completed by the 30th June, 2017;(e) any pre-existing individual account which has been identified as a reportable account under this sub-rule shall be treated as a reportable account in allsubsequent years, unless the account holder ceases to be a resident of any country or territory outside India as per tax laws of such jurisdiction.(4) The following procedures shall apply for purposes of identifying reportable accounts among new individual accounts:—
(a) unless the reporting financial institution elects otherwise, the following new individual accounts are not required to be reviewed, or reported as U.S.reportable accounts:—(i) a depository account unless the account balance exceeds an amount equivalent to fifty thousand U.S. dollars at the end of any calendar year;(ii) a cash value insurance contract unless the cash value exceeds an amount equivalent to fifty thousand U.S. dollars at the end of any calendaryear;(b) in case of a new individual account,—(i) in respect of a U.S. reportable account, which does not fall under sub-clauses (i) and (ii) of clause (a), upon account opening or within ninetydays after the end of the calendar year in which the account ceases to be covered under sub-clauses (i) and (ii) of clause (a); and(ii) in respect of other reportable account, upon account opening, the reporting financial institution shall obtain a self-certification, which may be part of the account opening documentation, that allows the reportingfinancial institution to determine the account holder's residence or residences for tax purposes and confirms the reasonableness of such self-certification based on the information obtained by the reporting financial institution in connection with the opening of the account, including anydocumentation collected in accordance with Prevention of Money-laundering (Maintenance of Records) Rules, 2005 under the Prevention of Money-Laundering Act, 2002 (15 of 2003);(c) where the self-certification obtained under clause (b) of this sub-rule establishes that the account holder is resident for tax purposes in a country orterritory outside India, the reporting financial institution shall treat the account as a reportable account and the self-certification shall also include theaccount holder's taxpayer identification number with respect to such country or territory outside India, subject to rule 239(5), and date of birth;(d) where a self-certification has been obtained under clause (b) of this sub-rule for a new individual account and if there is a change of circumstances withrespect to such account which causes the reporting financial institution to know, or have reason to know, that the said self-certification is incorrect orunreliable, the reporting financial institution shall not rely on the said self-certification and shall obtain a valid self-certification that establishes theresidence or residences for tax purposes of the account holder but if the reporting financial institution is unable to obtain a valid self-certification, thereporting financial institution shall treat the account as a reportable account with respect to each such country or territory outside India for which anindicium is identified.(5) The following procedures shall apply for purposes of identifying reportable accounts among pre-existing entity accounts:—
(a) unless the reporting financial institution elects otherwise, either with respect to all pre-existing entity accounts or, separately, with respect to anyclearly identified group of such accounts, a pre-existing entity account with an aggregate account balance or value which does not exceed an amountequivalent to two hundred and fifty thousand U.S. dollars as on the 30th June, 2014 (in case of a U.S. reportable account), or as the case may be, 31stDecember, 2015 (in case of other reportable account), is not required to be reviewed, identified, or reported as a reportable account until the aggregateaccount balance or value exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as of the last day of any subsequent calendaryear;(b) a pre-existing entity account that has an aggregate account balance or value that exceeds an amount equivalent to two hundred and fifty thousand U.S.dollars as on the 30th June, 2014 (in case of a U.S. reportable account), or as the case may be, 31st December, 2015 (in case of other reportableaccount), and a pre-existing entity account that does not exceed an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 30thJune, 2014 (in case of a U.S. reportable account), or as the case may be, 31st December, 2015 (in case of other reportable account) but the aggregateaccount balance or value exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as of the last day of any subsequent calendaryear, shall be reviewed in accordance with the procedure provided in clause (d) of this sub-rule;(c) with respect to pre-existing entity accounts referred to in clause (b), only accounts which are held by,—(i) one or more entities which are reportable persons; or(ii) passive non-financial entity with one or more controlling persons who are reportable persons, shall be treated as reportable accounts but theaccounts held by non-participating financial institutions for which aggregate payments as provided in clause (h) of sub-rule (1) of rule 239 arereported shall be treated as reportable accounts;(d) for pre-existing entity accounts referred to in clause (b) with respect to which reporting is required, a reporting financial institution, to determinewhether the account is held by one or more reportable persons, or by a passive non-financial entity with one or more controlling persons who arereportable persons, or by non-participating financial institutions, shall apply the following review procedures:—(i) to determine whether the entity is a reportable person, the reporting financial institution shall,—(A) review information maintained for regulatory or customer relationship purposes including information collected in accordance withthe rules made under the Prevention of Money-laundering Act, 2002 (15 of 2003) to determine whether the information indicates thatthe account holder is a reportable person. Explanation.—For the purpose of this sub-clause, information indicating that the account holder is a resident of any country orterritory outside India as per tax laws of such country or territory includes a place of incorporation or organisation, or an address in acountry or territory outside India;(B) treat the account as a reportable account, if the information as per item (A) indicates that the account holder is a reportable person,unless it obtains a self-certification from the account holder, or reasonably determines based on information in its possession or that ispublicly available, that the account holder is not a reportable person but if the information as per item (A) indicates that the accountholder is an entity not based in the United States of America which is a financial institution, or the reporting financial institutionverifies the account holder's Global Intermediary Identification Number, then the account shall not be treated as a U.S. reportableaccount;(ii) treat the account holder as a non-participating financial institution if,—(A) the account holder is an Indian financial institution or other partner jurisdiction financial institution and treated by the United Statesof America as a non-participating financial institution;(B) the account holder, being a financial institution, is not an Indian financial institution or other partner jurisdiction financial institution,unless the reporting financial institution,—(I) obtains a self-certification from the account holder that it is a financial institution referred to in sub-clauses (a) to (m) ofclause (5) of rule 238; or(II) in the case of participating foreign financial institution defined in Annex II of the FATCA agreement or a financial institutionreferred to in sub-clauses (e) to (m) of clause (5) of rule 238, verifies the account holder's Global Intermediary IdentificationNumber;(iii) the reporting financial institution shall determine whether the account holder is a passive non-financial entity with one or more controllingpersons who are resident of any country or territory outside India as per tax laws of such country or territory and in making thesedeterminations the reporting financial institution shall follow the following procedures:—(A) for purposes of determining whether the account holder is a passive non-financial entity, the reporting financial institution shallobtain a self-certification from the account holder to establish its status, unless it has information in its possession or which ispublicly available, based on which it can reasonably determine that the account holder is an active non-financial entity or a financialinstitution other than an investment entity referred to in sub-clause (B) of clause (c) of Explanation to clause (3) of rule 238;(B) for purposes of determining the controlling persons of an account holder, a reporting financial institution may rely on informationcollected and maintained in accordance with the rules made under the Prevention of Money-laundering Act, 2002 (15 of 2003);(C) for purposes of determining whether a controlling person of a pre-existing account of passive non-financial entity is a reportableperson, a reporting financial institution may rely on,—(I) information collected and maintained in accordance with rules made under the Prevention of Money-laundering Act, 2002(15 of 2003) in the case of pre-existing entity account held by one or more non-financial entity with an aggregate balance orvalue which does not exceed an amount equivalent to one million U.S. dollars; or(II) a self-certification from the account holder or such controlling person of the passive non-financial entity with an accountbalance or value which exceeds an amount equivalent to one million U.S. dollars;(D) if any controlling person of a passive non-financial entity is a resident of any country or territory outside India for tax purposes, theaccount shall be treated as a reportable account;(e) the following additional procedures shall be applicable to pre-existing entity accounts:—(i) review of pre-existing entity accounts with an aggregate account balance or value that exceeds an amount equivalent to two hundred and fiftythousand U.S. dollars as on the 30th June, 2014 (in case of a U.S. reportable account) shall be completed by the 30th June, 2016 and review ofpre-existing entity accounts with an aggregate account balance or value that exceeds an amount equivalent to two hundred and fifty thousandU.S. dollars as on the 31st December, 2015 (in case of other reportable account) shall be completed by the 31st December, 2016;(ii) review of pre-existing entity accounts with an aggregate account balance or value which does not exceed an amount equivalent to two hundredand fifty thousand U.S. dollars as on the 30th June, 2014 (in case of a U.S. reportable account), or as the case may be, 31st December, 2015 (incase of other reportable account), but exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 31st December ofa subsequent year, shall be completed within the calendar year following the year in which the aggregate account balance or value exceeds anamount equivalent to two hundred and fifty thousand U.S. dollars;
(iii) if there is a change of circumstances with respect to a pre-existing entity account that causes the reporting financial institution to know, orhave reason to know, that the self-certification or other documentation associated with the account is incorrect or unreliable, the reportingfinancial institution shall re-determine the status of the account in accordance with the procedures set forth in clause (d) of this sub-rule.(6) The following procedures shall apply for purposes of identifying reportable accounts and accounts held by non-participating financial institutions amongnew entity accounts:—
(a) a reporting financial institution, to determine whether the new entity account is a reportable account, shall apply the following review procedures:(i) determine whether the entity is a reportable person and for that the reporting financial institution shall,—(A) obtain a self-certification, which may be part of the account opening documentation, that allows the reporting financial institution todetermine the account holder's residence or residences for tax purposes and confirm the reasonableness of such self-certificationbased on the information obtained by the reporting financial institution in connection with the opening of the account, including anydocumentation collected in accordance with the rules made under the Prevention of Money-laundering Act, 2002 (15 of 2003) but ifthe entity certifies that it has no residence for tax purposes, the reporting financial institution may rely on the address of the principaloffice of the entity to determine the residence of the account holder;(B) treat the account as a reportable account, if the information as per item (A) indicates that the account holder is a reportable person,unless it reasonably determines based on information in its possession or which is publicly available, that the account holder is not areportable person but if the information as per item (A) indicates that the account holder is an Indian financial institution, or partnerjurisdiction financial institution, which is not a non-participating financial institution or a participating foreign financial institution ora non-reporting financial institution then the account shall not be treated as a U.S. reportable account;(ii) determine whether the account holder is a passive non-financial entity with one or more controlling persons who are reportable persons and inmaking these determinations the reporting financial institution shall follow the following procedures:—(A) for purposes of determining whether the account holder is a passive non-financial entity, the reporting financial institution shall relyon a self-certification from the account holder to establish its status, unless it has information in its possession or that is publiclyavailable, based on which it can reasonably determine that the account holder is not a passive non-financial entity;(B) for purposes of determining the controlling persons of an account holder, a reporting financial institution may rely on informationcollected and maintained in accordance with the rules made under the Prevention of Money-laundering Act, 2002 (15 of 2003) but inthe case of an account other than a U.S. reportable account, if the reporting financial institution is not legally required to collect andmaintain information in accordance with the rules made under the Prevention of Money-laundering Act, 2002 (15 of 2003), it mustapply substantially similar procedures for the purpose of determining the controlling persons;(C) for purposes of determining whether a controlling person of a passive non-financial entity is a reportable person, a reporting financialinstitution may rely on a self-certification from the account holder or such controlling person;(b) the reporting financial institution shall determine whether the account holder is a non-participating financial institution and in such case any paymentto the account holder shall be reported as per clause (h) of sub-rule (1) of rule 239.(7) The following additional procedures shall apply in implementing the due diligence requirement specified in sub-rules (1) to (6):—
(a) a reporting financial institution,—I. may not rely on a self-certification or documentary evidence if the reporting financial institution knows or has reason to know that the self-certification or documentary evidence is incorrect or unreliable;II. in the case of an account other than a U.S. reportable account, in exceptional circumstances where a self-certification cannot be obtained by areporting financial institution in respect of a new account in time to meet its due diligence and reporting obligations with respect to thereporting period during which the account was opened, must apply the due diligence procedures as applicable for the pre-existing accounts tosuch new accounts, until such self-certification is obtained and validated;(b) a reporting financial institution may presume that an individual beneficiary (other than the owner) of a cash value insurance contract or anannuity contract receiving a death benefit is not a reportable person and may treat such financial account as other than a reportable accountunless the reporting financial institution has actual knowledge, or reason to know, that the beneficiary is a reportable person but if a reportingfinancial institution has actual knowledge, or reason to know, that the beneficiary is a reportable person, it shall follow the proceduresspecified in clause (b) of sub-rule (3). Explanation.—For the purposes of this clause, a reporting financial institution shall be deemed to have reason to know that a beneficiary of acash value insurance contract or an annuity contract is a reportable person if the information collected by the reporting financial institution andassociated with the beneficiary contains indicia specified in clause (b) of sub-rule (3).(c) the following procedures relating to aggregation of account balance and currency shall apply:—(i) for purposes of determining the aggregate balance or value of financial accounts held by an individual, a reporting financialinstitution shall be required to aggregate all financial accounts maintained by it, or by a related entity, but only to the extent that thecomputerised systems of that reporting financial institution links the financial accounts by reference to a data element such as clientnumber or taxpayer identification number, and allows account balances or values to be aggregated;(ii) for purposes of determining the aggregate balance or value of financial accounts held by an entity, a reporting financial institutionshall be required to take into account all financial accounts which are maintained by it, or by a related entity, but only to the extentthat the computerised systems of that reporting financial institution links the financial accounts by reference to a data element such asclient number or taxpayer identification number, and allows account balances or values to be aggregated;(iii) for purposes of determining the aggregate balance or value of financial accounts held by a person to determine whether a financialaccount is a high value account, a reporting financial institution shall also be required, in the case of any financial accounts that arelationship manager knows, or has reason to know, are directly or indirectly owned, controlled, or established (other than in afiduciary capacity) by the same person, to aggregate all such accounts;(iv) for the purposes of rules 238, 239 and this rule, any account maintained in rupees or in any permissible currency (other than theUnited States Dollar) as designated by the Reserve Bank of India shall be converted to United States Dollar at the end of the reportingperiod as per the reference rates of the Reserve Bank of India and such converted amount in the United States Dollar shall be used fordetermining the balance or value of a financial account provided in such rules. Explanation 1.—For the purposes of this clause each holder of a jointly held financial account shall be attributed the entire balance or value of thejointly held financial account for purposes of applying the aggregation requirements.(8) In case of a U.S. reportable account opened on or after the 1st July, 2014 but before the date of entry into force of FATCA agreement, irrespective of thedue diligence procedures specified in sub-rule (4) or sub-rule (6) of this rule for new accounts, the reporting financial institution may, in lieu of the proceduresspecified in the said sub-rules, apply the following alternative procedures:—
(a) within one year after the date of entry into force of the FATCA agreement, reporting financial institutions shall,—(i) with respect to a new individual account opened on or after the 1st July, 2014 but before the date of entry into force of FATCA agreement,request the self-certification specified in sub-rule (4) and confirm the reasonableness of such self-certification consistent with the proceduresspecified in sub-rule (4); and(ii) with respect to a new entity account opened on or after the 1st July, 2014 but before the date of entry into force of FATCA agreement, performthe due diligence procedures specified in sub-rule (6) and request for information as necessary to document the account, including any self-certification, required under sub-rule (6);(b) the reporting financial institution shall report on any new account which is identified pursuant to clause (a) of this sub-rule as a U.S. reportable accountor as an account held by a non-participating financial institution, as applicable, by the date which is the later of,—(i) the 31st of May next following the date on which the account is identified as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable; and(ii) forty-five days after the account is identified as a U.S. reportable account or as an account held by a non-participating financial institution, asapplicable but the information required to be reported with respect to such a new account shall be information which would have beenreportable had the new account been identified as a U.S. reportable account or as an account held by a non-participating financial institution,as applicable, as of the date the account was opened;(c) by the date that is one year after the date of entry into force of the FATCA agreement. Reporting financial institutions shall close any new accountdescribed in clause (a) for which it was unable to collect the required self-certification or other documentation in accordance with the procedurespecified in clause (b) but in addition, by such date, the reporting financial institutions shall—(i) with respect to such closed accounts which prior to such closure were new individual accounts (without regard to whether such accounts werehigh value accounts), perform the due diligence procedure specified in clause (c) of sub-rule (3), or(ii) with respect to such closed accounts which prior to such closure were new entity accounts, perform the due diligence procedures specified insub-rule (5); and(d) the reporting financial institution shall report the information specified in rule 239 in respect of any closed account which is identified under clause (c)as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable, by the date that is the later of,—(i) the 31st of May next following the date on which the account is identified as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable; and(ii) forty-five days after the account is identified as a U.S. reportable account or as an account held by a non-participating financial institution, asapplicable; but in respect of all new entity accounts or a clearly identified group of such accounts which are U.S. reportable accounts opened on or after the 1stJuly, 2014, and before the 1st January, 2015 the reporting financial institution may, in lieu of the procedure specified in clauses (a) to (d), treat suchaccounts as pre-existing entity accounts and apply the due diligence procedure related to pre-existing entity accounts specified in sub-rule (5) withoutregard to the account balance or value threshold specified in clause (a) of sub-rule (5).(9) For the purposes of rules 238, 239 and this rule, exchange of any information in respect of any transaction in relevant crypto-assets is only for the limitedpurposes of administration of taxes by the relevant jurisdiction.