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Know your customer

1. Establishing and maintaining customer relationships - Know-Your-Customer principle

In our everyday business activity, SEB follows the effective legislation and the principles of Best Practice. Being a reliable partner for both, the new as well as the existing customers is important for us. In order to provide the best service and ensure trustworthy operation of the financial sector, SEB follows one of the basic principles and commitments in banking: Know Your Customer.

According to the Money Laundering and Terrorist Financing Prevention Act, effective in the Republic of Estonia, and other legislation established in the European Union, the credit institutions, operating in Estonia, are obliged to establish the identity of their customers. Likewise, they are obliged to collect and examine the data of the customers and update these on a regular basis. The customer’s data must be accurate and up-to-date.

It is only natural that businesses and associated persons change in course of time. Accordingly, from time to time we contact you with a request to update your data. This means that we need information also about the ultimate beneficial owners and the nature of your business. In the interest of clarity we may ask you further questions or request documents confirming the presented data, when concluding a contract or at any given moment during the validity of the contract.

We look forward to your cooperation and understanding and ask for clear answers to our data inquiries. We give our best to avoid any unnecessary delays in carrying out the transactions and providing the services.

The entire information submitted to us by the client is confidential and we are allowed to forward it only in cases prescribed by law.

2. Exchange of tax information with the USA

In April 2014, Estonia and USA concluded an intergovernmental agreement, based on which Estonia undertakes to provide USA with information about taxable persons of the USA residing in Estonia. This intergovernmental agreement is based on the US act “Foreign Account Tax Compliance Act” or FATCA adopted in 2010, pursuant to which financial institutions all over the world shall identify clients, who must pay taxes in the USA.

Estonia has adopted Tax Information Exchange Act, to implement the FATCA agreement.

From 1 July 2014, the financial institutions must ask their customers, whether they are taxable persons in the USA. In case of a legal person, it is also asked, if their ultimate beneficial owners are taxable persons or citizens of the USA.

Taxable persons of the USA are, for example, US citizens and residents for tax purposes, and the persons, who are entitled to settle in the USA at any time (Green Card).

We ask a legal person, to disclose the residence for tax purposes and citizenship of the ultimate beneficial owner of the company. If the ultimate beneficial owner is a taxable person or citizen of the USA, we ask to disclose the US federal taxpayer’s identification number (TIN). A taxable person of the USA (natural, as well as legal persons) shall be asked to fill in a form established by US Internal Revenue Service (IRS), where TIN (taxpayer identification number) shall be added. The customer will get this number from his US tax administrator.

Estonian financial institutions are obliged to submit the information regarding taxable persons of the USA (including data on the account owner, info on tax residency and account balance) to the Estonian Tax and Customs Board, who will pass this information on to the IRS.

Please be aware that if a customer does not submit the required information, the financial institution will be obliged to submit data of the person to the Tax and Customs Board.

Further information about FATCA is available on the website of the Ministry of Finance www.fin.ee/fatca and on the website of the US Internal Revenue Service www.irs.gov.

Exchange of information with the EU Member States and the OECD Member States

Likewise to the USA, Estonia will be exchanging information also with the European Union (EU) Member States and the OECD Member States.

The basis of information exchange with the OECD countries is the Convention on Mutual Administrative Assistance in Tax Matters, which Estonia signed on 29.05.2013.

The basis for exchanging information in the EU is the Council Directive 2014/107/EU, adopted on 9 December 2014 supplementing Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation based on the OECD standard.

The tax information exchange with the EU and OECD Member States is similar to the exchange of information with the USA. The legal grounds for gathering and exchanging information are stipulated in the Tax Information Exchange Act.

Tax information exchange with the EU and OECD Member States starts in 2017; however information will be gathered starting from 2016.

We ask our customers to fill in and sign the Client Data Sheet, the questions contained in which are necessary for exchanging the tax information – e.g. we ask private persons to give information on their tax residency/residencies and legal persons on the tax residency/residencies of ultimate beneficial owners, besides we want to know the place of birth of ultimate beneficial owners.

Further information on the exchange of tax information between the EU and OECD Member States can be found on the website of the Ministry of Finance www.fin.ee/fatca.


Looking forward to the your cooperation and understanding
SEB

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