Most hedge fund managers have responded that FATCA does not apply to them because we do not have any United States (US) investors. This can be likened to stating that a particular financial institution does not have to comply with the anti-money laundering legislation because it does not on-board any money launderers. FATCA is not only concerned with whether a hedge fund has US Investors but whether, by virtue of the hedge funds business activity and its legal structure, it is a vehicle that potentially may be used by US Persons to evade their tax obligations in the US. Further, FATCA is designed to ensure that South African hedge funds are in a position to report not only US persons but also other Non-Participating Financial Institutions and passive Non-Financial Foreign Entities.
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