@Juancar having read through your post as also the ref'd material,
(a) reporting / recognition of earned interest from CDs etc. rules are the same whether the financial entity is domestic or foreign. The only difference is that in case of domestic institutions you receive a 1099-INT while in case of foreign entities there may be no such supporting documentation.
(b) the whole recognition dilemma is because of the concept of constructive receipt . My understanding of this is because a financial institution generally will recognize the customer's earning as debt / expense at the end of the year ( financial or tax ). Thus whether you actually can get the "earned interest" in your hands or not , the entity's books will reflect this as a debt ( accounts payable ) and therefore its taxable income. This means that you as the "purported recipient/beneficiary " must also recognize the income and be taxed.
Thus , for example if you start a CD with a maturity of 12 months ( and per contract interest paid quarterly ) on July 1st of 2023, by the end of 2023, you and the bank will recognize 2 quarter's worth of interest earned by Dec 31st of 2023. So the bank should give you a 1099-INT of 2 Qs worth of earned interest for 2023, even though the monies are actually not available to be withdrawn for another six months. This gets even more contorted if you now break the CD and close the account in say Jan of 2024 --- the penalty may actually reduce your capital.
This as I understand how things are supposed to work, to keep both the financial institution's books/taxes and yours in sync from IRS / taxing view. Since IRS really does not recognize / allow for different taxing schemes for other countries, it uses US rules / viewpoint for all income sources whether domestic or foreign.
Does this make sense ?
pk
