U.K. Bribery Act 2010 and the U.S. Foreign Account Tax Compliance Act – possible liability for FSC regulated businesses

UK’s Bribery Act 2010

Licenceholders are probably aware that the UK’s Bribery Act 2010 came into effect on 1st July 2011. They may not have noted that who can commit offences under that Act includes the term "close connection with the UK." The Act defines at Section 12(4) "close connection" as:

"(4)For the purposes of subsection (2)(c) a person has a close connection with the United Kingdom if, and only if, the person was one of the following at the time the acts or omissions concerned were done or made—

(a)a British citizen,

(b)a British overseas territories citizen,

(c)a British National (Overseas),

(d)a British Overseas citizen,

(e)a person who under the British Nationality Act 1981 was a British subject,

(f)a British protected person within the meaning of that Act,

(g)an individual ordinarily resident in the United Kingdom,

(h)a body incorporated under the law of any part of the United Kingdom,

(i)a Scottish partnership."

The Commission understands that as the majority of the population of the Isle of Man are British Citizens, they could potentially be caught under the UK’s Bribery Act 2010 and commit offences under that Act. So too could any UK incorporated company operating in the Isle of Man or any other body incorporate or partnership (wherever incorporated or formed) including Isle of Man incorporated companies and partnerships operating in the UK. By virtue of Sections 3(6) and 12(5) of the Act, irrespective of whether the offences they commit actually occurred in the UK. The UK authorities have published detailed guidance on the Bribery Act 2010.

Please view The Bribery Act 2010.

US Foreign Account Tax Compliance Act

The Commission wishes to bring to the attention of licenceholders their potential liability under the US Foreign Account Tax Compliance Act ("FATCA"). Licenceholders may be aware that the FATCA was passed in March 2010.

FATCA requires foreign financial institutions to report directly to the US Internal Revenue Service ("IRS") certain information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest. Phased implementation of FATCA will begin in 2013. A Foreign Financial Institution ("FFI") must enter an agreement with the IRS by 30 June 2013 to ensure that it will be identified as a participating FFI in sufficient time to allow withholding agents to refrain from withholding beginning on 1 January 2014.

Further information on FATCA can be found on the IRS website 

The Commission does not and cannot issue legal advice and the above interpretations should not be relied upon in any legal or commercial matters.

The Commission wishes to draw to its licenceholder’s attention the possibility of their liability under the UK’s Bribery Act 2010 and the US’s FATCA so that they might act appropriately.