A FFI stands for Foreign Financial Institution. It refers to a financial institution that is not located or operating within the United States.
In the context of US regulations, particularly related to the Foreign Account Tax Compliance Act (FATCA), an FFI is any non-US entity that:
- Accepts deposits in the ordinary course of a banking or similar business.
- As a substantial portion of its business, holds financial assets for the account of others.
- Is engaged primarily in the business of investing, reinvesting, or trading in securities, partnership interests, commodities, or any interest (including a futures or forward contract or option) in such securities, partnership interests, or commodities.
Essentially, it's a financial institution outside the US that the IRS needs to monitor due to FATCA regulations. These institutions must identify and report information about accounts held by U.S. persons to the IRS.
