A foreign financial institution (FFI) is a term used with the Foreign Account Tax Compliance Act (FATCA). An FFI is defined under the Treasury Regulations and within the FATCA Intergovernmental Agreements (IGA).
Under FATCA, a foreign entity is any entity that is not a U.S. person and includes a territory entity.1
Generally, a financial institution means any entity that (i) accepts deposits in the ordinary course of a banking or similar business, (ii) holds, as a substantial portion of its business, financial assets for the benefit of one or more persons, (iii) is an investment entity, (iv) is an insurance company that is required to make payments with respect to cash value insurance or annuity contracts, or (v) is an entity that is a holding company which includes one of these institutions described above.2
The definition of a financial institution will also include a financial institution as defined in an applicable Model 1 IGA or Model 2 IGA.