The definition of the person to be reported excludes a financial institution. With regard to pooling agreements and APIFIs, pooling agreements and APIFIs are treated in a way that is not accountable to be declared, where all participants in the systems are MPF and ORSO systems declared under the AIA (i.e. they are financial institutions), pooling agreements and APIS are treated as if they had no accounts to report. Any Andean system involved in pooling agreements and APIFis is responsible for identifying and informing their own account holders. The amendments will take effect on January 1, 2020. In other words, these MPF, ORSO, pooling and APIF systems, which fall within the definition of a reporting financial institution, are not exempt from the performance of the obligations under Part 8A of the Domestic Revenue Regulation as of January 1, 2020. For more information on financial institution reporting, see Chapter 3 of the Guidelines for Financial Institutions. MPF systems, ORSO, pooling agreements or APIFIs that fall within the definition of investment firms will be financial institutions. With the exception of an approved securities and futures settlement system, which is specifically defined as an investment firm, a system/agreement is also considered an investment firm when it acts primarily as an investment activity or business activity for its clients; Gross revenues come mainly from investment, reinvestment or trading of financial assets and are managed by a financial institution. In December 2017, the OECD conducted an evaluation of non-reporting financial institutions (“INNF”) in Hong Kong for SIR purposes. One of its conclusions was that MPF systems, ORSO-registered systems, ORSO pooling agreements and authorized pooling funds should not be treated as RNAs. The Internal Income Regulation (Amendment) (No.
2) Regulation 2019 provides two timetables for MPF systems, ORSO systems and other accounts to be reported between pre-existing individual accounts. The verification of an existing single account, which is a high-value account, must be completed by December 31, 2020. On the other hand, the verification of an existing single account, which is a low value account, must be completed by December 31, 2021. In order to meet OECD requirements, the Hong Kong government is expected to amend IRS legislation to remove these systems from the RNA list. As a result, these systems are likely to become reporting financial institutions (“Reporting FIs”) and are subject to automatic exchange of information (“AIA”). MPF systems and systems registered by the ORSO should therefore begin implementing due diligence procedures and collecting relevant information for the AIA from 1 January 2020.