The U.S. Bureau of Economic Analysis (BEA) is conducting its Benchmark Survey of Financial Services Transactions between U.S. financial services providers and foreign persons. The survey, on Form BE-180, is conducted every five years and is one of a number of surveys the BEA conducts to gather data on cross-border activities involving U.S. service providers in support of its broader examination of certain macroeconomic matters. Covered financial service providers must submit Form BE-180 or request an additional extension of time to file by November 1, 2015 (or, for certain providers, December 1, 2015).
Who Must Report
U.S. Financial Services Providers. Only U.S. financial services providers must report, but that term has a broad meaning. It includes, among others, U.S.1 investment advisers and U.S. funds, trusts and other investment vehicles including hedge funds, private equity funds, mutual funds, REITS and pension funds.2 Under a variety of circumstances, affiliates of U.S. investment advisers who serve as general partners or in a similar capacity to investment entities may also be classified as U.S. financial services providers.
$3 million in Sales or Purchases. A U.S. financial services provider must file if, in its 2014 fiscal year, it had either (i) more than $3 million in sales of financial services to foreign persons, or (ii) more than $3 million in purchases of financial services from foreign persons. In determining whether it has met either threshold, a provider:
- Must include the activities of its entire “consolidated U.S. business enterprise.” This includes, in addition to the provider itself, (i) any U.S. entity, proceeding up the provider’s ownership chain, that owns more than 50 percent of the voting securities of the U.S. entity immediately below it, and (ii) any U.S. entity, proceeding down the ownership chain(s) of each of these entities and of the provider, whose voting securities are more than 50 percent owned by the U.S. entity immediately above it. However, it generally includes only the financial services components of those other U.S. companies;
- Must consider sales and purchases of financial services separately and not on a net basis;
- Must include sales to and purchases from foreign affiliated persons; and
- May rely on the judgment of knowledgeable persons in its organization who can identify reportable transactions with a reasonable degree of certainty, without conducting a detailed manual records search.
What are “Sales” and “Purchases” of Financial Services?
This is another broad term. It includes, among other things:
- Management fees or performance-based fees that a U.S. investment adviser receives from a non-U.S. fund or other non-U.S. advisory client (sales);
- Management fees or performance-based fees that a U.S. fund pays a non-U.S. investment adviser (purchases);
- Management fees or performance-based fees that a U.S. investment adviser pays a non-U.S. sub-adviser, including an affiliate (purchases);
- Brokerage commissions a U.S. fund pays a non-U.S. broker for transactions in foreign markets (but not commissions a U.S. fund pays a U.S. broker for transactions that broker’s non-U.S. affiliate effects in foreign markets) (purchases); and
- Performance-based allocations that an affiliate of a U.S. investment adviser receives in its capacity as general partner of a non-U.S. fund that is organized as a limited partnership (sales).3
Transactions can create covered sales or purchases regardless of whether the related financial services are performed in the U.S. or abroad, and regardless of where the buyer or seller are located at the time of the transactions.
Reporting Deadlines and Procedures
Form BE-180’s cover sheet reflects an October 1, 2015 due date, but the BEA has provided the following automatic extensions:
- November 1, 2015 for a U.S. Reporter that the BEA has not contacted.
- November 1, 2015 for a U.S. Reporter that the BEA has contacted and that has a BE-180 identification number below 140012490.
- December 1, 2015 for a U.S. Reporter that the BEA has contacted and that has a BE-180 identification number above 140012490.
U.S. Reporters that the BEA has contacted may request extensions of up to an additional 30 days by applying via email or calling the BEA at (202) 606 5588 by November 1, 2015. U.S. Reporters that the BEA has not contacted may request an extension of up to an additional 60 days by following the instructions on the BEA website and providing the information requested by November 1, 2015.
A U.S. enterprise may file a single Form BE-180 to report all of its covered financial services transactions, or each of the enterprise’s component companies that is a U.S. financial services provider may file a separate Form BE-180.4 A U.S. Reporter that the BEA contacts must file at least a partial Form BE-180 whether or not it meets the $3 million threshold for purchases or sales.
Potential Penalties
Persons who fail to report may be subject to a civil penalty of not less than $2,500 and not more than $32,500, injunctive relief commanding compliance or both. Persons who willfully fail to report will be fined not more than $10,000 or may be imprisoned for not more than one year, or both.5
Confidentiality
Form BE-180, like other BEA surveys, is authorized by the International Investment and Trade in Services Survey Act. That Act provides that survey information submitted to the BEA is confidential, may be used only for analytical and statistical purposes, and cannot be presented in a manner that allows it to be individually identified without a U.S. Reporter’s prior written permission. The instructions to Form BE-180 state that the information in the report cannot be used for purposes of taxation, investigation or regulation. The BEA’s website states that federal courts have held that survey information submitted to the BEA is not subject to the Freedom of Information Act.
SUMMARY - BEA SURVEYS THAT U.S. PERSONS MUST COMPLETE WHETHER OR NOT THE BEA CONTACTS THEM
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Matthew Anderson Counsel +1 415 772 1293 matthew.anderson@sidley.com |
2The definition of “financial services provider” is based on North American Industry Classification System (NAICS) codes, and it also includes companies involved in (i) securities, commodity contracts, and other financial investments and related activities including brokers, dealers, exchanges, traders, underwriters, investment bankers and providers of securities custody services, (ii) depository credit intermediation and related activities including commercial banking, savings institutions, check cashing, and debit card issuing, (iii) nondepository credit intermediation including credit card issuing, sales financing and consumer lending, and (iv) insurance and related activities.
3E.g., a Cayman Islands “master” fund of the kind found in many master-feeder arrangements for private funds.
4The BEA refers to each U.S. financial services provider that files a Form BE-180 as a “U.S. Reporter.” If you intend to file separate reports, the BEA requests that you contact it at (202) 606-5588 or via email.
5Any officer, director, employee or agent of any corporation who knowingly participates in such violations, upon conviction, may be subject to the same fine, imprisonment or both.
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