1. By Income Tax Department
As provided in Rule 114G(9), the statement needs to be furnished to the Directorate of Intelligance and Criminal Investigation and the said Directorate has been given the responsibility of ensuring the compliance. The penalty provisions provided in the Income-tax Act, 1961, are as under:
(a) Section 271FA of the Income-tax Act, 1961
(i) For failure to furnish the statement of reportable account within the prescribed time limit – Rs. 100 for each day of failure
(ii) For failure to furnish the statement of reportable account after a notice is served on him requiring to file the statement – Rs. 500 for each day of failure
(b) Section 271FAA of the Income-tax Act, 1961 provides for levy of a penalty of Rs. 50,000 on RFI for furnishing inaccurate information in the statement of reportable account and where
(i) Inaccuracy is due to failure to comply with due diligence requirements or is deliberate on the part of the RFI
(ii) The RFI knows of the inaccuracy at the time of furnishing the statement of reportable account, but does not inform the Directorate of Intelligence and Criminal Investigation
(iii) The RFI discovers the inaccuracy after the statement of reportable account is furnished and fails to inform and furnish the correct information to the Directorate of Intelligence and Criminal Investigation within 10 days.
2. By Regulators
Most of the RFIs are regulated by a regulator which has been vested with the power to license, authorize, register, regulate or supervise their activities. Rule 114G(1 1) requires the regulators to issue necessary instructions and guidelines from time to time for
(a) Incorporating the requirements of reporting and due diligence
(b) Providing the procedure and manner of maintaining the information by the reporting financial institution
(c) Ensuring the availability of the information with the RFIs for meeting their reporting obligation, if such information is not maintained by it under any rule or regulation issued by the regulator
3. Requirement of obtaining GIIN
The RFIs having U.S. Reportable Accounts need to register with the US IRS and obtain Global Intermediary Identification Number by registering at http://www.irs.gov/Businesses/Corporations/FATCA-Foreign-FinancialInstitution-Registration-Tool. GIIN also needs to be obtained by the Financial Institutions claiming exemption as Non-reporting Financial Institution on the grounds of being a “financial account with a local client base” since they need to report the financial accounts held by a specified U.S. person.