5 Questions to ask yourself on FATCA while investing in MF

Arnav PandyaThere is a need for investors to complete their requirements with respect to Foreign Account Tax Compliance Act (FATCA) especially in their mutual funds. In such a situation there are still many people who do not know that they need to complete the process and are hence unaware of what to do. This might be an excuse for the investor but it would not help them avoid the pain of finding their investments frozen or redeemed. At the moment there is a reprieve for the investors because the final date for the completion of the process has been postponed but they need to pay attention to this area. Here are 5 important things to note with respect to the FATCA process.Are you a US citizen?One of the first questions that an individual needs to ask themselves is whether they are a US citizen because this is the start of the entire process of FATCA. The guidelines have been brought in especially to track the situation with respect to US citizens and whether they have been disclosing the details of their investments abroad to the US tax authorities. If you are a resident Indian then the process becomes very simple and this is something that you should be aware of when you are looking to complete this provision.Have you given a self declaration?IF you are a resident Indian then the process gets simplified and the financial institution where your money is invested which in this case is a mutual fund would accept a simple declaration to this effect. There are specific details that need to be given in the declaration and the good part is that this does not require lots of documents and can be easily completed by just filling up a form with the basic details and submitting it to the institution.Have you completed the process for all investments?There is a big risk for investors especially those who have spread out their investments across a variety of instruments. This risk is the fact that they might forget to give the FATCA declaration for some of the investments and this could make them non compliant for the process. This is the reason why every investor should go back and take a closer look at their portfolio to see if they have done the process for their entire portfolio. No investment should be left out and hence this area needs some attention.Are your details updated with the fund?There are a lot of personal details like the bank account plus the email id and the phone number which need to be given to the mutual fund. This plays an important role because the mutual fund will communicate with the investor using these details. If they are not updated then it could also happen that the mutual fund is not able to get through to the investor and they might miss out on some vital information. This is the reason why the details should be checked so that they will also be able to act in case there is a need for them to do so.Are you sure about completing the process?There are times when investors have a vague recollection about the completion of the FATCA process and if this is the case then they should not take any risk and recheck with the mutual fund. The penalty for not completing the requirement could be freezing of the investment or compulsory redemption and while this has not been finalised the investor should ensure that they do not miss out on the situation just because they did not pay close attention to the details.