A Crypto-Asset User is treated as a Reportable User beginning as of the date it is identified as such pursuant to the due diligence procedures described in this Section.
| A. | Due diligence procedures for Individual Crypto-Asset Users |
The following procedures apply for purposes of determining whether the Individual Crypto-Asset User is a Reportable User.
| (1) | When establishing the relationship with the Individual Crypto-Asset User, or with respect to Preexisting Individual Crypto-Asset Users by 12 months after the effective date of these rules, the Reporting Crypto-Asset Service Provider must obtain a self-certification that allows the Reporting Crypto-Asset Service Provider to determine the Individual Crypto-Asset User’s residence(s) for tax purposes and confirm the reasonableness of such self-certification based on the information obtained by the Reporting Crypto-Asset Service Provider, including any documentation collected pursuant to AML/KYC Procedures. In the case of a self-certification that fails the reasonableness test, the Reporting Crypto-Asset Service Provider must obtain either (i) a valid self-certification, or (ii) a reasonable explanation and appropriate documentation supporting the reasonableness of the self-certification and retain a copy or a notation of such explanation and documentation, before providing services effectuating Relevant Transactions to the Entity Crypto-Asset User. |
| (2) | If at any point there is a Change of Circumstances with respect to an Individual Crypto-Asset User that causes the Reporting Crypto-Asset Service Provider to now, or have reason to know, that the original self-certification is incorrect or unreliable— |
| (a) | the validity of the self-certification with respect to the information that is incorrect or no longer reliable, is terminated until the information is updated or a reasonable explanation and, where appropriate, documentation supporting the validity of the original self-certification, is obtained. For these purposes, the Reporting Crypto-Asset Service Provider should determine whether new information that is obtained with respect to the Individual Crypto-Asset User’s profile in accordance with re-documentation undertaken in accordance with AML/KYC Procedures or other regulatory obligations includes new information that constitutes a Change of Circumstances; |
| (b) | where a self-certification becomes invalid with respect to the information that is no longer reliable, the Reporting Crypto-Asset Service Provider may treat a person as having the same status as it had prior to the Change in Circumstances for a period limited to the earlier of— |
| (i) | 90 calendar days from the date that the self-certification became invalid; |
| (ii) | the date the validity of the self-certification is confirmed; or |
| (iii) | the date that a new self-certification is obtained; and |
| (c) | a Reporting Crypto-Asset Service Provider may treat a self-certification as valid, notwithstanding that the self-certification contains an inconsequential error, if the Reporting Crypto-Asset Service Provider has sufficient documentation on file to supplement the information missing from the self-certification due to the error. In such case, the documentation relied upon to cure the inconsequential error must be conclusive. An inconsequential error does not include— |
| (i) | a failure to provide a jurisdiction of residence; |
| (ii) | where information on a self-certification contradicts other information contained on the self-certification or in the files of the Reporting Crypto-Asset Service Provider; or |
| (iii) | a similarly consequential error. |
| B. | Due diligence procedures for Entity Crypto-Asset Users |
The following procedures apply for purposes of determining whether the Entity Crypto-Asset User is a Reportable User or an Entity, other than an Excluded Person or an Active Entity, with one or more Controlling Persons who are Reportable Persons.
| (1) | Determine whether the Entity Crypto-Asset User is a Reportable User. |
| (a) | When establishing the relationship with the Entity Crypto-Asset User, or with respect to Preexisting Entity Crypto-Assets Users by 12 months after the effective date of these rules, the Reporting Crypto-Asset Service Provider must obtain a self-certification that allows the Reporting Crypto- Asset Service Provider to determine the Entity Crypto-Asset User’s residence(s) for tax purposes and confirm the reasonableness of such self-certification based on the information obtained by the Reporting Crypto- Asset Service Provider, including any documentation collected pursuant to AML/KYC Procedures. If the Entity Crypto-Asset User certifies that it has no residence for tax purposes, the Reporting Crypto-Asset Service Provider may rely on the place of effective management or on the address of the principal office to determine the residence of the Entity Crypto-Asset User. |
| (b) | If the self-certification indicates that the Entity Crypto-Asset User is resident in a Reportable Jurisdiction, the Reporting Crypto-Asset Service Provider must treat the Entity Crypto-Asset User as a Reportable User, unless it reasonably determines based on the self-certification or on information in its possession or that is publicly available, that the Entity Crypto-Asset User is an Excluded Person. |
| (2) | Determine whether the Entity has one or more Controlling Persons who are Reportable Persons. |
With respect to an Entity Crypto-Asset User, other than an Excluded Person, the Reporting Crypto-Asset Service Provider must determine whether it has one or more Controlling Persons who are Reportable Persons, unless it determines that the Entity Crypto-Asset User is an Active Entity, based on a self-certification from the Entity Crypto-Asset User.
| (a) | Determining the Controlling Persons of the Entity Crypto-Asset User. For the purposes of determining the Controlling Persons of the Entity Crypto-Asset User, a Reporting Crypto-Asset Service Provider may rely on information collected and maintained pursuant to AML/KYC Procedures, provided that such procedures are consistent with the 2012 FATF Recommendations (as updated in June 2019 pertaining to virtual asset service providers). If the Reporting Crypto-Asset Service Provider is not legally required to apply AML/KYC Procedures that are consistent with the 2012 FATF Recommendations (as updated in June 2019 pertaining to virtual asset service providers), it must apply substantially similar procedures for the purposes of determining the Controlling Persons. |
| (b) | Determining whether a Controlling Person of an Entity Crypto-Asset User is a Reportable Person. For the purposes of determining whether a Controlling Person is a Reportable Person, a Reporting Crypto-Asset Service Provider must rely on a self-certification from the Entity Crypto- Asset User or such Controlling Person that allows the Reporting Crypto- Asset Service Provider to determine the Controlling Person’s residence(s) for tax purposes and confirm the reasonableness of such self-certification based on the information obtained by the Reporting Crypto-Asset Service Provider, including any documentation collected pursuant to AML/KYC Procedures. In the case of a self-certification that fails the reasonableness test, the Reporting Crypto-Asset Service Provider must obtain either (i) a valid self-certification, or (ii) a reasonable explanation and appropriate documentation supporting the reasonableness of the self-certification and retain a copy or a notation of such explanation and documentation, before providing services effectuating Relevant Transactions to the Entity Crypto-Asset User. |
| (3) | If at any point there is a Change of Circumstances with respect to an Entity Crypto-Asset User or its Controlling Persons that causes the Reporting Crypto-Asset Service Provider to know, or have reason to know, that the original self-certification is incorrect or unreliable, the Reporting Crypto-Asset Service Provider must apply the procedures referred to in Section III(A)(2). |
| C. | Requirements for validity of self-certifications |
| (1) | A self-certification provided by an Individual Crypto-Asset User or Controlling Person is valid only if it is signed or otherwise positively affirmed by the Individual Crypto-Asset User or Controlling Person, it is dated at the latest at the date of receipt and it contains the following information with respect to the Individual Crypto-Asset User or Controlling Person: |
| (c) | jurisdiction(s) of residence for tax purposes; |
| (d) | with respect to each Reportable Person, the TIN with respect to each Reportable Jurisdiction; and |
| (2) | A self-certification provided by an Entity Crypto-Asset User is valid only if it is signed or otherwise positively affirmed by the Crypto-Asset User, it is dated at the latest at the date of receipt and it contains the following information with respect to the Entity Crypto-Asset User: |
| (c) | jurisdiction(s) of residence for tax purposes; |
| (d) | with respect to each Reportable Person, the TIN with respect to each Reportable Jurisdiction; |
| (e) | in case of an Entity Crypto-Asset User other than an Active Entity or an Excluded Person, the information described in subparagraph C(1) with respect to each Controlling Person of the Entity Crypto-Asset User, unless such Controlling Person has provided a self-certification pursuant to subparagraph C(1), as well as the role(s) by virtue of which each Reportable Person is a Controlling Person of the Entity, if not already determined on the basis of AML/KYC Procedures; and |
| (f) | if applicable, information as to the criteria it meets to be treated as an Active Entity or Excluded Person. |
(3)
| (a) | Where a self-certification establishes that an Individual Crypto-Asset User or Entity Crypto-Asset User or a Controlling Person is resident for tax purposes in a Reportable Jurisdiction, the self-certification must also include the Crypto-Asset User or Controlling Person’s TIN with respect to each Reportable Jurisdiction, subject to the exception of subparagraph C(3)(c) below. |
| (b) | The self-certification must be provided in a written or electronic form. If the self-certification is provided electronically, the electronic system must ensure that the information received is the information sent and must document all occasions of user access that result in the submission, renewal, or modification of a self-certification. In addition, the design and operation of the electronic system, including access procedures, must ensure that the person accessing the system and furnishing the self-certification is the person named in the self-certification, and must be capable of providing upon request a hard copy of all self-certifications provided electronically. |
| (c) | Notwithstanding subparagraphs C(1) and (2), the TIN is not required to be collected if the jurisdiction of residence of the Reportable Person does not issue a TIN to the Reportable Person, or the domestic law of the relevant Reportable Jurisdiction does not require the collection of the TIN issued by such Reportable Jurisdiction. |
| D. | General due diligence requirements |
| (1) | A Reporting Crypto-Asset Service Provider that is also a Financial Institution for the purposes of the Common Reporting Standard may rely on the due diligence procedures completed pursuant to Sections IV and VI of the Common Reporting Standard for the purpose of the due diligence procedures pursuant to this Section. A Reporting Crypto-Asset Service Provider may also rely on a self-certification already collected for other tax purposes, provided such self-certification meets the requirements of paragraph C of this Section. |
| (2) | A Reporting Crypto-Asset Service Provider may rely on a third party to fulfil the due diligence obligations set out in this Section III, but such obligations remain the responsibility of the Reporting Crypto-Asset Service Provider. |
| (3) | A Reporting Crypto-Asset Service Provider is required to maintain all documentation and data for a period of not less than five years after the end of the period within which the Reporting Crypto-Asset Service Provider must report the information required to be reported pursuant to Section II. |
