Don’t get caught and be ready when the curtains go up
By Christopher Schaub, Solution Manager, Risk and Financial Crimes at SAS Australia and New Zealand
It looks like just yesterday that financial institutions stumbled around trying to meet FATCA! Well, surprise, surprise, the global version has now taken center stage and the deadline is fast approaching. The Common Reporting Standard (CRS), also called “GATCA”, shares similarities with FATCA, but as you can imagine, the scale is much larger with increased volume and complexity.
CRS is truly global and extends to any tax-resident customer in a reportable country. For FATCA, it was all about identifying and reporting U.S. individuals for tax purposes. Incredibly over 100 countries have now joined the program, which commits itself to sharing information from 1 July 2017 onwards. And if this looming deadline isn’t daunting enough, CRS has far-reaching requirements covering many more devices, more customers, more accounts and many more rules.
Don’t see this as just another “check in box” exercise. Tackling this with a manual process or even coupling together a semi-automated system, as many have done for FATCA, just won’t cut it. While it may seem like another situation to waste valuable resources, time and money to meet a new compliance, I also see this as a real opportunity. It takes serious consideration to take advantage of this global initiative and be smart in your strategy:
Automate. Ensure a risk-based approach by utilizing KYC (Know Your Customer) and CDD (Customer Due Diligence) technology. It is critical to keep an eye on your customers, discover where they are violating the rules (called ‘indications’) and quickly resolve any exceptions. Why reinvent the wheel when this technology is available.
Combine. Do not treat CRS separately for FATCA. Design your CRS platform with FATCA in mind and draw parallels between them – data, rules, processes and reports. And don’t forget to include all the skilled resources that have helped shape your FATCA solution, as they will be key to designing, implementing and maintaining your next generation tax compliance platform.
Be flexible. Adapting quickly to change will lead to success. Designing and implementing a static approach to FATCA was acceptable as it is more simplified compared to CRS. However, CRS is a bigger business and the impact it will have is not yet fully understood. Rules are continuously adjusted as new countries join the program. Being unable to adapt quickly to these changes will be frustrating and costly.
Getting ready for CRS is a daunting task, especially since the size and impact is not yet fully known apart from what FATCA has taught us since we started in 2010.
However, you can be smart! By considering a few basic rules, you can achieve a common automated tax compliance platform that is both cost-effective and creates operating efficiency. First and foremost, it will give you and your stakeholders peace of mind.
So when the curtains go up July 1, 2017, the audience is inhabiting a solid approach to CRS and ready for an encore as you quickly adjust to all the new expectations being thrown towards you as the show goes on. Is your organization ready for CRS opening night?