The "Foreign Account Tax Compliance Act" (FATCA) is a key component of the “Hiring Incentives to Restore Employment“ (HIRE) Act, which was passed by the U.S. Congress on 18 March 2010. The legislation aims to prevent tax evasion by U.S. taxpayers.
In order to achieve this objective, existing tax treaties have been supplemented and "Intergovernmental Agreements" (IGAs) have been concluded between the USA and a series of states. In February 2013, the Federal government initialled an agreement accordingly. On 31 May 2013, it was ratified by the Bundestag (lower house of German parliament).
In this connection, as a bank or an insurance company you are obliged:
- to check your customer data for any U.S. indicators,
- to collect further data, if necessary, and
- to report information about the identified U.S. persons together with their respective account balances.
In order to achieve sustainable IGA compliance, institutions have to make far-reaching adjustments to the processes for identifying and reporting, as well as to the systems that are involved.
Data collection and management processes should already have been designed and largely implemented. This applies likewise to the consequences for the operating core processes in areas such as payment transactions, account opening/closing, or data maintenance. Admittedly, the final implementing rules for reporting are not yet available, so that it is still likely that there will be a need for analysis and amendments. However, identifying non-IGA compliant institutions also still represents a challenge. Furthermore, financial institutions will have to identify so-called High Value Accounts and will be obliged to subject them to an enhanced review.
In order to ensure full IGA compliance, besides identifying and reporting the customers concerned, processes and IT systems have to be adjusted accordingly. There could be changes, for example, in the area of compliance (FATCA Officer), or in customer advisory services.
Together with iBS Innovative Banking Solutions AG, we have developed a global FATCA solution. iBS-FAIR is a modular SAP-based standard software that provides access to the relevant FATCA SAP and non-SAP systems and enables our customers to submit timely and accurate reports to the respective tax authorities.
That is why we can provide you with optimum support to deal with any FATCA requirements that are still pending.
Within the SKS Group we pool our manifold subject knowledge and expertise. Our long-standing experience in conceptualising and implementing regulatory requirements means that we are able to provide you with optimal support in all project phases.