14. What are the withholding requirements for non-compliance?

In general, for a country that has not signed an intergovernmental agreement* with the US*, a withholding agent* is required to withhold 30% on a withholdable payment made to a foreign financial institution* (FFI) or to a non-financial foreign entity* (NFFE), unless the FFI or NFFE meets certain requirements. Withholdable payments under FATCA are payments of interest, dividends, rents, and certain other specified items of income from U.S. sources.

In addition, an FFI* must withhold 30% on any pass-through payment it makes to a non-compliant account holder, as well as on payments it makes to another FFI, unless that FFI meets certain requirements. An example of a pass-through payment is where a dividend is paid by a US company to the account holder via a FFI. 

Even though the Nedbank Africa Region (NAR) subsidiaries have not signed an IGA with the US, the subsidiaries are part of the Nedbank Group and therefore they become, what is called, "participating foreign financial institutions* (participating FFIs)".

The NAR subsidiaries must provide all the relevant data required to comply with the FATCA legislation because they form part of the "expanded affiliated group"* called Nedbank Group.

Furthermore, they are not currently required to withhold on any payments of a US source to account holders, provided they supply the necessary information regarding the account holder to the upstream withholding agent.

*For any defined terms please see the Table of terms and definitions.