Article 1

For the purposes of point (a) of Article 382(4) of Regulation (EU) No 575/2013, institutions shall consider as non-financial counterparties established in a third country, counterparties that meet both of the following conditions:

1. (a)

   they are established in a third country;

2. (b)

   they would qualify as a non-financial counterparty within the meaning of point (9) of Article 2 of Regulation (EU) No 648/2012 if they were established in the United Kingdom.

Institutions shall verify whether a counterparty is a non-financial counterparty established in a third country:

1. (a)

   at trade inception when trading with a new counterparty;

2. (b)

   on an annual basis for existing counterparties;

3. (c)

   where there is reason to believe that the counterparty is no longer a non-financial counterparty established in a third country.

Institutions shall substantiate their opinion that an undertaking is a non-financial counterparty established in a third country.