Fatca's Endgame
In past columns, I tracked the progress of the Foreign Account Tax Compliance Act (Fatca) regulation from when US regulators first set out on their effort to collect withholding tax from foreign holdings by US entities, through efforts to institute compliance plans.
With the new postponed compliance date of July 1 fast-approaching, the industry is looking at a two-part endgame. The first piece is getting the last parts of guidance from the US Internal Revenue Service on all the details of what Fatca requires, including details of the W-8BEN-E form firms will have to file under the Act. The second part is getting data management technology up and running and ready in time for the looming deadline.
At Inside Reference Data's March 18 breakfast event covering Fatca developments, sponsored by SIX Financial Information, Dax Philbert, global Fatca loans program manager at Deutsche Bank, advanced the idea of a "Fatca hub" that gathers the necessary data and distributes it to different groups within a firm.
Workarounds may be necessary, Philbert said. "Then have a phase two or plan B that will get you the future phase [of a complete Fatca system]," he explained. The global landscape is one that includes markets with stricter privacy regimens, such as Saudi Arabia, Dubai, Hong Kong, Singapore, Luxembourg and some other Middle Eastern and North African markets. The "Fatca hub" concept could be a way to cope with varied levels of privacy rules.
"You have to think systematically about how you address sharing of information, manage the business effectively and also have consistency in your processes," Philbert cautioned.
Before anyone can advance theories on how to structure or change data management operations concerning Fatca filings and information, however, there appear to be a lot of unanswered questions about Fatca requirements—more than just the nature of the "W-8BEN-E" form, said Jon Watts, director and head of banking and securities, Fatca, at Deloitte & Touche, who gave a keynote address at the event.
Numerous intergovernmental agreements (IGAs) between the US and other countries are now in place, but standards bodies, especially in Europe, may emerge to tie together the various IGAs and provide consistency, according to Watts. He sees this development and other uncertainties about Fatca rule information needing three or maybe even five years to achieve that consistency.
Undoubtedly, there will be "a lot of noise" after July 1, said Watts, "because a lot of companies have thought about [Fatca] for a long time but have only just started the process of reaching out to customers." That will also become evident in the need to figure out whether firms need only collect documentation for compliance or remediate their processes completely, as Watts sees it.
Beyond July 1, a February 2015 deadline also must be adhered to, for getting reporting processes and customer remediation set up. What will occur if the IRS or US Treasury should decide that Fatca does not go far enough and other requirements should be added to the purview of Fatca? That could further confuse anyone trying to do their level best to be ready, both on July 1 and for the latter deadline about a year away.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
Insurance: The role of risktech in effectively managing emerging risks and driving competitive edge
This whitepaper covers the global survey, conducted by Chartis Research and TCS, of banking, financial services and insurance firms, which found that insurers are struggling to adapt to evolving risks and regulatory requirement increases. Chartis offers…
FX automation key to post-T+1 success, say custodians
Custody banks saw uptick in demand for automated FX execution to tackle T+1 challenges.
Observations and lessons to learn from the move to T+1
The next few years will see other jurisdictions around the world look to North America for guidance on transitioning to shorter settlement cycles.
Expanded oversight for tech or a rollback? 2025 set to be big for regulators
From GenAI oversight to DORA and the CAT to off-channel communication, the last 12 months set the stage for larger regulatory conversations in 2025.
DORA flood pitches banks against vendors
Firms ask vendors for late addendums sometimes unrelated to resiliency, requiring renegotiation
In 2025, keep reference data weird
The SEC, ESMA, CFTC and other acronyms provided the drama in reference data this year, including in crypto.
Waters Wavelength Ep. 299: ACA Group’s Carlo di Florio
Carlo di Florio joins the podcast to discuss regulations.
IEX, MEMX spar over new exchange’s now-approved infrastructure model
As more exchanges look to operate around-the-clock venues, the disagreement has put the practices of market tech infrastructure providers under a microscope.