Governance and Implementation Compliance Hallmarks for FIs
A new report from the Organization for Economic Cooperation and Development (OECD) says that tax administrations can assess financial institutions’ FATCA and CRS compliance by monitoring their staff training initiatives.
The report, “Guide on Promoting and Assessing Compliance by Financial Institutions” (the “Guide”) offers questions for tax administrators to ask FIs about their training initiatives. The report identifies various governance and implementation hallmarks that FIs should consider when fulfilling their CRS and FATCA reporting obligations. It is published by the Forum on Tax Administration.
According to the Guide, to determine the impact of new FATCA and CRS legislation, FIs need to monitor local tax authority guidance and IRS updates. The due diligence requirements for the CRS and FATCA are the same for all types or sizes of FIs.
The purpose of the FATCA & CRS Compliance Guide is two-fold:
- To help government officials and FIs understand their obligations to monitor and ensure compliance of CRS and FATCA reporting obligations
- To provide a practical overview of what a robust compliance regime may involve.
Given higher than normal employee turnover, FIs are advised to incorporate FATCA and CRS compliance information into all employee and stakeholder onboarding and training materials.
The first chapter looks at the initiatives related to education, service initiatives and the development of self-help tools. Many related activities will be more effective when carried out in cooperation with other agencies, industry associations and stakeholders.
The second chapter looks at the options for the identification of the FI population. These include registration requirements, the use of analytical tools, dialogue with industry associations and other stakeholders as well as risk-based compliance activities.
Sample questions about FATCA & CRS compliance for tax administrators:
- Does the FI require mandatory training for stakeholders and employees who have responsibilities pertaining to the CRS and FATCA?
- Is the FI’s training updated annually to account for legislation or guidance changes?
- Does the FI have periodic evaluation of changes and its communications on these changes?
- Did the FI have training specific to employees responsible for on-boarding and documentation validation?
- Did the FI inform its clients of their CRS and FATCA obligations?
- Did the FI update its intranet and public webpage to address CRS and FATCA?
Ways tax administrations can review FI training compliance:
- Including sample FATCA and CRS questions to ascertain the soft or hard documentation available for desk or on-site review.
- Examine training to staff, business units and other foreign offices based on impact assessment of legislative updates
- Evaluate timeliness of CRS and FATCA compliance training schedules, materials, proof of completion, and public FI web page information
- Research content of FI Intranet for employee access to information on CRS and FATCA
- Review web-based training demo for staff, business units and other foreign offices. This should be based on impact assessment of legislative updates, training schedules, timelines, materials and proof of completion of training.
- Evaluate public FI webpage information on CRS and FATCA compliance.
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