Over the past year, Alacra has hosted several informal peer-to-peer FATCA events in London. Banks from the City joined  us to discuss and learn about different approaches to FATCA. The Alacra Compliance Team has also met directly with many of our clients and prospects to understand their plans and requirements for addressing FATCA. Representatives from institutions such as Mizuho, Nomura, Macquarie, UBS, and Lloyds all participated. These conversations led to the Periodic Table of FATCA Acronyms as well as several themes related to implementation of FATCA.

  • Most firms have assigned the FATCA data collection duties to their existing on-boarding teams. One branch of a US bank have decided to have their Tax Operations team collect FATCA indicia.
  • Few institutions are sourcing new platforms to assist with the onboarding aspect of FATCA. Most banks are either updating or expanding their existing client on-boarding and tax workflow. At least one bank we know of is creating an entirely new tax system and architecture, but this is the exception, not the rule.
  • Each firm has a FATCA project manager and team. Each business unit also has a FATCA program manager and SME reporting up into a FATCA project management office (PMO).
  • Several institutions are planning to use offshore teams to validate documents while others are purchasing document validation software.
  • FATCA implementation is driven by the Tax Department. All firms saw close co-operation between Tax, Compliance, Onboarding, and Legal as key.  Some institutions are leveraging the expertise of the big four Accounting Firms.
  • Banks are split between running central FATCA teams to gather US indicia and having business units handle gathering US indicia. Firms running FATCA teams at the business unit level may create non compliance factors if a set of company-wide rules are not enforced. The advantages of a centralized onboarding service include consistency of the KYC process and of compliance paperwork. Most firms realize cost savings through lower overhead or the ability to place key functions in lower cost locations. The disadvantages of a centralized process could include difficulty managing service level agreements to onboard business unit clients fast as well as distance from local nuances.
  • There is wide discrepancy on the approach to existing clients. With a gulf between firms reviewing and refreshing existing client data to uncover any US indicia and others who presume FATCA classification based on the knowledge they hold on the client today. Some FFIs prefer to force self-certification on clients, assuming clients will want to avoid withholding and thus fill out their W8/W9 properly. For clients who fail to self-certify, the bank will do so. Of course, self-certification may mean lower compliance costs for the bank; however, it does increase the potential for client irritation.
  • Many firms are going through existing client reviews to specifically update and enhance the documentation held so they could be certain of the presence (or not) of USA indicia. The other firms plan to complete classification as part of their refresh programme. Most banks would prefer to avoid further client contacts for the self-certification process, but that may just be a way of avoiding the potential of uncovering uncomfortable situations or encouraging clients to find other banks.
  • While some banks are planning to assign FATCA classification, several others felt that assigning a classification could be construed as providing tax advice, which could lead to legal awkwardness. Those firms will have all clients complete a W-9 or W-8 and self-classify. All banks are waiting for the release of the GIIN portal on July 15. Alacra plans to begin supporting the GIIN soon.
  • Global wealth managers and retail banks seemed to have the most challenges to face from FATCA requirements.
  • Due to the shifting deadlines, all firms are waiting for finalised forms and reporting requirements from the IRS before completing their plans.

Tell us about your experiences with FATCA implementation. Is your institution doing similar work or taking an entirely different approach?

Upcoming  FATCA Deadlines as of July 12, 2013:

On July 12, the IRS extended the deadlines for FATCA compliance and the GIIN registration portal.

August 19: expected launch of GIIN Portal and start of FFI registration.

January 1, 2014: finalization of GIIN registration.

April 25, 2014: last day to finalize GIIN registration for inclusion in June FFI List.

June 2, 2014: FFI list publication

June 30, 2014: QI, WP, and WT Agreements to incorporate FFI requirements end (extended from December 31.

July 1, 2014: new account opening procedures begin for withholding agents.

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