Introduction
If you are a foreign financial
institution (FFI) or a non-financial foreign entity (NFFE), the B.I.S.S. FATCA Accreditation is an important tool to help
reduce your risk of compliance failure, punitive withholding penalties and a substantial reduction in the number of counterparties
that will be prepared to do business with you.
If you are a software vendor, your customers will want to know that
your products will help them become, and stay compliant with these complex, challenging and changing regulations.
About
FATCA
FATCA's objective is to target and prevent tax evasion by US Persons who hide some or all of their
assets and income in foreign (non-US) accounts or other non-US investment structures.
FATCA requires all
foreign financial institutions (FFIs) and non-financial foreign entities (NFFEs) to use certain rules to identify and categorise
themselves and their account holders as either, FFIs, individuals or non financial foreign entities (NFFEs). Many firms,
estimated at over a million, who previously were not considered ‘financial institutions' are FFIs under FATCA.
The
rules are very complex and vary dependent on a number of factors, including which category an FFI or their account holders
fall into, when their accounts were opened, the aggregate US dollar equivalent cash and securities values in their accounts
on a specified date, the nature of existing KYC and AML documentation in hand and an FFIs ability to search its databases
for indicia of US status at the account level and below.
FATCA, therefore, poses significant challenges both for FFIs
and for software vendors that support them. Those challenges include policy, documentation and procedural changes as well
as systems changes.
Why do I need the B.I.S.S. FATCA Accreditation?
FATCA is a
cascade system, based on contractual agreements with the IRS and self certifications of an FFI's status. What sits behind
those self certifications are assumptions that the certifying party has understood its obligations, its precise status
under FATCA and that it has systems, policies and procedures in place which are capable of meetings those obligations.
As an FFI, your FATCA Accreditation will provide a standardised and independent assessment of your capability to be FATCA
compliant.
If you are an FFI, your compliance risk is also directly affected by not just your own level of compliance,
but also the level of compliance of your counterparties.
You will also be able to ask your counterparties if they have
a FATCA Accreditation. If they do, this will give you comfort that their policies, procedures and systems are capable of being
FATCA compliant according to the same independent standard.
If you are a software vendor, you have probably been working
for some time on changes to your products that reflect your customer's exposure to FATCA. There are specific elements
of FATCA that have systems implications. A FATCA Accreditation for your software means that your customers can have confidence
that your product has those elements included.
Who sets the standard?
Ultimately the standard
is set by the regulations themselves and it's the responsibility of each FFI and all associated vendors who supply their
systems to know about FATCA and interpret it correctly to ensure compliance. Using these specifications B.I.S.S. Research
as Accreditation Specialists and GlobeTax as Subject Matter Experts (SMEs) have now created a FATCA Accreditation Framework for the industry, so that everyone has
a standardised method for assessing compliance to FATCA and any counterparty risk involved.
GlobeTax will independently
assess for FATCA compliance, strengths and weaknesses and B.I.S.S. Research will audit the results providing the accreditation
and report. This will result in the only truly independent verification of FATCA compliance in the market today.
This
will raise the financial services firm's standards for FATCA across branch networks or distributed international offices
also providing a valuable training and FATCA awareness tool.
Click to email B.I.S.S. for additional information
