Navigating the Challenges and Risks of Complying with CRS and FATCA Reporting Obligations
The objective of the Foreign Account Tax Compliance Act (FATCA) is to enhance tax compliance among US citizens through a comprehensive set of regulations. This legislation mandates foreign financial institutions to determine if their clients are “US persons” and provide the US Internal Revenue Service (IRS) with information on their financial accounts. Non-compliance with these regulations may lead to substantial penalties. The Common Reporting Standard (CRS), akin to FATCA, also aims to counter offshore tax evasion and upkeep the transparency of the global tax system. Financial institutions operating in participating jurisdictions are obligated to identify the tax residencies of their clients and disclose financial accounts held by foreign tax residents to the local tax authorities. These authorities then exchange this information with the relevant jurisdictions’ tax authorities. The time for yearly FATCA and CRS reporting is either near or already underway in some jurisdictions. Here are the deadlines for several of these. Challenges One of the major challenges faced by firms is the analysis and interpretation of the requirements, which consist of over 300 pages of guidelines to read. Additionally, completing more than 65 fields per record and dealing with complicated multilevel XML files can also pose a significant barrier. Moreover, managing different jurisdictions, each with its own unique set of intricacies, can be quite complex. Risks In terms of risks, incorrect completion of CRS and FATCA reporting, as well as failing to meet the reporting deadline and its many requirements, can result in penalties, reputational damage, and legal consequences. Investing a costly number of resources to file the relevant submissions, which may burden your budget and disrupt your daily operations, is another risk. Lastly, making incorrect or false submissions can result in withholding penalties for specific payments. How can Complyport Tech assist you? Given the complexity of FATCA and CRS reporting, the challenges in keeping up with the regulatory updates, and the penalties in case of non-compliance, it is reasonable to get ready early. Complyport Tech can fully support your business’ regulatory reporting needs. We receive reportable information, construct the CRS and FATCA annual reports, and, for most countries, submit them to the relevant competent authority as prescribed by the relevant provisions of both CRS and FATCA. Complyport Tech’s CRS and FATCA Reporting Services provide a user-friendly approach to receiving, validating, transforming and submitting the relevant information required under CRS/FATCA reporting and due diligence rules. These services are delivered via our powerful and award-winning Polaris platform, together with the rest of its reporting offerings and our team of experts’ impeccable support services. Complyport Tech’s CRS/FATCA – Key Features Cost-efficient integrated reporting solutions provided under a single platform. Highly automated and scalable solution that can report for as many accounts as you have. Flexible in the way it receives data, either via standard templates or raw data. Multiple reporting health checks for both content and schema and automatic filtering of erroneous entries. Automatic conversion of data to XML and separation of files based on tax residency. Submissions to various tax authorities worldwide. On-going communication with regulators to ensure the system reports reflect regulatory updates and changes.
Missed the deadline for CRS and FATCA reporting obligation?
It is better late than never! MAP FinTech can fully support and assist with your CRS & FATCA reporting needs. We receive reportable information, construct the CRS and FATCA annual reports, and, for most countries, submit them to the relevant competent authority as prescribed by the relevant provisions of CRS and FATCA. ΜΑΡ FinTech’s CRS and FATCA Reporting Services provide a user-friendly approach to receiving, validating, transforming and submitting the relevant information required under the CRS/FATCA reporting and due diligence rules. These services are delivered via our powerful and award-winning Polaris platform, together with the rest of its reporting offerings and our team of experts’ impeccable support services. ΜΑΡ FinTech’s CRS/FATCA – Key Features Cost-efficient integrated reporting solutions provided under a single platform. Highly automated and scalable solution that can report as many accounts as you have. Flexible in the way it receives data, either via standard templates or raw data. Multiple reporting health checks for both content and schema and automatic filtering of erroneous entries. Automatic conversion of data to XML and separation of files based on tax residency. Submissions to various tax authorities worldwide. On-going communication with regulators to ensure the system reports reflect regulatory updates and changes. About MAP FinTech Complyport.tech is a leading award-winning UK and EU regulatory technology provider for the financial services industry, specialising in reporting solutions arising from the requirements of a number of complex and challenging international regulations such as EMIR, MiFID II/MiFIR, ASIC, SFTR, FATCA, DAC6 and CRS. MAP FinTech also provides innovative and comprehensive solutions for Best Execution Monitoring, RTS 27/28 reporting, KYC & AML Transaction Monitoring, Trade Surveillance (Market Abuse), and eKYC (Screening, eIDV, Document Authentication). If you would like to receive more information about our CRS and FATCA Reporting Services, or you need assistance with your CRS and FATCA reporting requirements, please do not hesitate to contact our expert team.
FATCA and CRS: are you ready to report?
The Foreign Account Tax Compliance Act (FATCA) is a complex set of rules which aims to increase tax compliance by US citizens. It requires foreign financial institutions to determine their clients who are “US persons” and directly report to the US Internal Revenue Service (US IRS) information on their financial accounts. Failure to comply with the reporting rules and legislation will result in heavy penalties. The Common Reporting Standard (CRS), which is similar to FATCA, also aims to prevent offshore tax evasion and protect the integrity of tax systems. It requires financial institutions in participating jurisdictions to identify the tax residencies of their clients and report financial accounts held by foreign tax residents to local tax authorities, which will in turn be exchanged with the tax authorities of the relevant jurisdictions. For both FATCA and CRS, delays in reporting – or failing to report at all – can result in fines and other penalties. Things to consider for this year’s reporting Reporting Financial Institutions (RFIs) need to ensure they remain updated with any amendments introduced by local tax authorities with respect to FATCA and CRS to avoid being held liable for non-compliance and sustain penalties. The additional participating and reportable jurisdictions for each country is one such example of keeping updated with the latest changes. By way of update, Costa Rica, Curacao, Grenada and Peru are now participating jurisdictions under CRS, whereas Morocco is the new 2021 reportable jurisdiction for Cyprus. Another update is that Curacao, Costa Rica and Hong Kong are the new 2021 reportable jurisdictions for British Virgin Islands. Several jurisdictions have introduced additional requirements. Luxembourg, for example, introduced a new law which entered into force on 1 January 2021 and amends both FATCA and CRS laws. One significant change is that Nil Reporting is now mandatory for both CRS and FATCA (it used to be mandatory for FATCA only). This carries a lump-sum penalty of EUR 10,000 for those who will not submit a Nil report. In addition to this, the Luxembourg tax administration can impose penalties of up to EUR 250,000 if it identifies non-compliance with the FATCA and CRS obligations, which can be increased by a maximum of 0.5% of the amounts that should have been reported by the RFIs but were not. In addition, the Luxembourg tax authority further issued a newsletter regarding the new codes introduced by the US IRS, which are recommended to be used for unknown tax identification numbers (TINs). On another note, the South African Revenue Service has issued updated CRS rules in October 2020, which replace the previous ones from 1 June 2021 and include, among others, rules on suspending and closing of financial accounts for failure to provide self-certification and on mandatory disclosure rules and administrative procedures. The reporting deadlines for a number of jurisdictions have been extended for this year, such as for the British Virgin Islands which are extended to 30 June 2021 (from 31 May 2021) for both CRS and FATCA and for Australia which – for FATCA only – is extended to 31 August 2021 (from 31 July 2021). Other jurisdictions stick to their ordinary deadlines, such as Cyprus and Luxembourg (30 June 2021), Germany and Australia (for CRS only) (31 July 2021), while in certain jurisdictions, the reporting deadline has already passed, such as the UK and South Africa (31 May 2021). How can Complyport Tech assist you? Given the complexity of the FATCA and CRS reporting, the challenges in keeping up with the regulatory updates and the penalties in case of non-compliance, it is reasonable to get ready early. Complyport Tech can fully support your business’ regulatory reporting needs. We receive reportable information, construct the CRS and FATCA annual reports, and, for most countries, submit them to the relevant competent authority as prescribed by the relevant provisions of CRS and FATCA. ΜΑΡ FinTech’s CRS and FATCA Reporting Services provide a user-friendly approach to receiving, validating, transforming and submitting the relevant information required under the CRS/FATCA reporting and due diligence rules. These services are delivered via our powerful and award-winning Polaris platform, together with the rest of its reporting offerings and our team of experts’ impeccable support services. ΜΑΡ FinTech’s CRS/FATCA – Key Features Cost-efficient integrated reporting solutions provided under a single platform. Highly automated and scalable solution that can report as many accounts as you have. Flexible in the way it receives data, either via standard templates or raw data. Multiple reporting health checks for both content and schema and automatic filtering of erroneous entries. Automatic conversion of data to XML and separation of files based on tax residency. Submissions to various tax authorities worldwide. On-going communication with regulators to ensure the system reports reflect regulatory updates and changes.
Complyport Tech presents extensive opportunities for firms in the future, Thomson Reuters survey shows
Can corporate governance and the culture of financial services firms keep up with the pace of growth of regulatory technology? During the past several years, regulators have invested heavily in technology to protect and monitor regulatory reporting data quality. The main challenges for 2021 will focus on new regulations, preparing for those with effective dates this year and those that are going through the legislation, proposal and comment processes. This leaves financial services firms with no option but to address automated reporting as a way of validating all data submitted to regulators, detecting and correcting data issues as they arise, and setting up an overall data governance framework across different regulatory reporting requirements. Thus, Regulatory Technology (RegTech) is crucial for operational management and strategic decision-making for both the risk and compliance functions as it is designed to help firms understand and meet legal requirements more effectively and efficiently. According to Thomson Reuters Regulatory Intelligence’s 2020 annual survey report “RegTech and the role of compliance in 2021”, despite firms facing several budget challenges during the pandemic, the adoption and implementation of regulatory technology has taken a huge step forward with 70% of the surveyed firms reporting that COVID-19 increased their reliance on technological solutions. The study, which shares the experiences of more than 400 compliance and risk practitioners, found that this sector’s growth is expected to accelerate in the coming months and years. Firms and their customers are realising the great value of adopting a wide variety of Fintech solutions. The survey also shows that firms must be careful to deploy solutions on solid foundations. This means getting corporate governance right. A quarter of respondents said that corporate boards and the risk and compliance functions need to be more involved in finding and adopting Fintech solutions for the firm, highlighting the absence of appropriate skill sets as one reason for this lack of involvement. Moreover, RegTech applications continue to provide popular, embedded solutions for firms in areas such as compliance monitoring, financial crime, AML/CTF, sanctions and regulatory reporting. Budgets are predicted to increase with a mix of in-house and external solutions as the option most frequently selected by respondents. Interestingly, just 16% of firms reported they had implemented RegTech solutions, with a further 34% stating that RegTech solutions were affecting the management of compliance. Notably, the report identifies a shift from build to buy; firms that employ inhouse solutions fell to 6% in 2020 from 17% in 2019, while 12% reported that all of their RegTech solutions were developed externally. Why choose Complyport Tech to be your regulatory technology partner? Complyport Tech is a leading and award-winning regulatory technology provider for the financial services industry, specialising in reporting solutions arising from the requirements of a number of complex and challenging international regulations such as EMIR, MiFID II/MiFIR, SFTR, FATCA, DAC6 and CRS. Complyport Tech also provides innovative and comprehensive solutions for Best Execution Monitoring, RTS 27/28 Reporting, AML Transaction Monitoring and Screening, Trade Surveillance (Market Abuse), and eKYC (Screening, eIDV, Document Authentication). Industry Pioneers Complyport Tech was one of the first providers in Europe to report under the European Market Infrastructure Regulation (EMIR) with 1.5 billion+ transactions successfully submitted since February 2014. The company currently supports over 170 B2B global clients, having been recognised for the Best RegTech Reporting Solution for 2019 by Finance Magnates London and named as one of the 100 most innovative RegTech companies in the world for 2020 and 2021 by RegTech Analyst. LSE-listed brokers, including some of the biggest CFD brokers in the world, currently use Complyport Tech’s innovative solutions. RegTech Experts Complyport Tech is not just a technology company that develops software to help clients report. At the core of its offerings lies compliance. Complyport Tech provides quality assurance that the reporting obligations are correctly covered in terms of data quality. If the need arises, the firm can also directly support businesses before any national competent authority without needing any external third-party advisory or assistance. Complyport Tech can directly and uninterruptedly report to a number of EU national competent authorities. Complyport Tech’s products have been repeatedly tested and passed several rigorous reviews by EU regulatory authorities, providing full transparency for both clients and EU national competent authorities. Moreover, the company offers financial institutions the unique facility to comply with a firm’s reporting obligations before the regulatory authorities, carry out audit trails, and conduct their own reconciliations. Complyport Tech has managed to successfully and innovatively combine the compliance and technology functions with both of its teams working in close unison. This allows the company to be flexible, efficient and effective in supporting the many new, demanding and dynamic requirements of the global RegTech world.. The team’s combined expertise underpins the company’s success in providing targeted solutions to its clients and addressing their reporting needs across a diverse regulatory landscape. One-Stop RegTech Provider Complyport Tech’s solutions are all delivered under the Polaris Platform, the company’s single and powerful RegTech tool. Besides transaction reporting, the Polaris platform combines, under a single unit interface, unique solutions such as Market Abuse Surveillance, AML Transaction Monitoring, Best Execution Monitoring, RTS reports and CRS/FATCA reporting, among others. This allows Complyport Tech to package its offerings to its clients by reducing direct and indirect costs, maintain a single point of contact for support and access to the system, and avoid the need of multiple integrations with various vendors, thus saving clients both time and resources. Impeccable Support Services Complyport Tech’s dedicated and experienced support team specialises in regulatory reporting, providing continuous support on what is needed to master transaction reporting requirements. This starts from the onboarding phase and covers the whole process up until the initiation of the live reporting, the handover of the platform to the client, and ongoing day-to-day support. Unparalleled Compliance Expertise Complyport Tech is a member of MAP S.Platis Group, a leading financial services consultancy group in the region that maintains one of the largest and most experienced teams of financial services compliance experts in the EU. This ensures that