The Model 1 Intergovernmental Agreement (“Model 1 IGA”) is an agreement between the U.S. government and a foreign government to implement FATCA through reporting by financial institutions to the foreign government, following by the automatic exchange of the information with the IRS.1
Under a Model 1 IGA, a foreign financial institution (FFI) does not report information directly to the IRS. The financial institution must first send the information to the local government authority, which then forwards the information to the IRS. In contrast, under a Model 2 IGA, foreign financial institutions send information directly to the IRS.
The U.S. Department of the Treasury publishes a list of countries which have entered into either the Model 1 IGA or Model 2 IGA. More information on U.S. FATCA and the compliance obligations can be found on the IRS website.