FATCA Compliance

The Foreign Account Tax Compliance Act (FATCA) is a U.S. federal law designed to combat tax evasion by U.S. taxpayers holding accounts and investments abroad. FATCA requires Foreign Financial Institutions (FFIs) to report information about U.S. account holders to the IRS, ensuring transparency and compliance with U.S. tax laws. By adhering to FATCA, institutions can avoid significant penalties and enhance their global compliance practices.

Key Challenges in FATCA Compliance

  • Efficiently identifying U.S. account holders and their substantial ownership in entities across your institution’s diverse business lines, geographies, and relationship classifications.
  • Integrating customer data from various systems and financial transactions to create a unified view of U.S. customers as a foundation for FATCA reporting.
  • Conducting comprehensive FATCA due diligence for new customers and reviewing and remediating existing customers’ profiles.
  • Developing a FATCA compliance infrastructure that is flexible, adaptable, and scalable to meet future international tax compliance requirements, including those under the CRS (Common Reporting Standard).
FATCA Compliance Solution

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KYCsphere’s FATCA Compliance Solution

Next generation Microsoft Azure Cloud based KYCsphere solution offering for Foreign Account Tax Compliance Act (FATCA) compliance streamlines identification of new US customers/accounts with the help of Customer Onboarding tool. Based on US indicia the tool identifies not only the seemingly apparent US customers/accounts among the individual account holders, but through Customer Due Diligence tool driven process goes on to discover substantial US ownership and hidden beneficial ownerships, across complex legal entities and corporate structures. Once such customer/account relationships are identified, requisite documentation as per the customer/account classification could be requested and captured within KYCsphere. These data rich profiles with documentary evidence are routed through roles and rules-based workflow within KYCsphere, across your financial institution. Further investigation could be performed with the help of Enhanced Due Diligence tool, for high risk FATCA non-compliant customers, including the recalcitrant customers.

US indicia identified preexisting customers/accounts, are required to be further filtered, where the aggregated assets and transactions exceed the FATCA prescribed thresholds. For such cases their current profiles would require review and FATCA remediation, including attaching documentary evidence/proofs and certifications. These tasks could be performed within KYCsphere through detailed profiling to be undertaken by the operational team and if required Enhanced Due Diligence done by the compliance team. The tool further supports seeking additional information from relationship managers for high risk and the recalcitrant customers. Year-end reporting of US customers’ data, including that of recalcitrant customers, is done either to the IRS directly or to the regulatory mechanism within the Foreign Financial Institution’s (FFI’s) country, as per required reporting format.

From new Customer Onboarding to monitoring existing ones and conducting Due Diligence, while offering reporting and withholding support, cloud based KYCsphere toolkit takes care of complete lifecycle of FATCA compliance. It leverages your institutions US customers/accounts current data along with provisioning for additional FATCA remediation data fields and documents to be captured, in order to feed secured FATCA repository on the cloud, dedicated for your institution. Over this repository, KYCsphere application and its underlying FATCA engine is available to perform FATCA compliance tasks across multiple lines of businesses, multiple jurisdictions and as per the requirements under multiple IGAs and treaties, in a cost-effective pay-as-you-go fashion.

KYCsphere’s cloud-based toolkit manages the full lifecycle of FATCA compliance, from onboarding to monitoring, due diligence, and reporting. It leverages existing U.S. customer data and provisions for additional FATCA remediation fields, with a secure FATCA repository supporting compliance across multiple lines of business, jurisdictions, and IGAs in a cost-effective, pay-as-you-go model.

See KYCsphere’s FATCA Compliance Solution in action.

Key Benefits of KYCsphere’s FATCA Compliance Solution

  • Build a cost-effective, pay-as-you-go FATCA compliance repository on the cloud, adaptable for future tax regulations in other countries without capital expenditure or software licensing costs.
  • Implement a single FATCA compliance platform for multiple jurisdictions, including countries with or without FATCA Inter-Governmental Agreements (IGAs).
  • Start with Customer Onboarding, proceed with Due Diligence, and complete FATCA remediation and reporting across your institution’s operations incrementally, aligning with multi-year FATCA compliance deadlines.
  • Facilitate collaboration between compliance, operational teams, and senior management on a single FATCA application platform, ensuring seamless acquisition of additional FATCA remediation data.
  • Achieve and maintain FATCA compliance efficiently, avoiding disruptions to current operations and additional maintenance or upgrade costs.

Ask our FATCA Compliance Solution Expert to get in touch with you.

FAQs

What is FATCA compliance, and why is it important?

FATCA compliance involves adhering to the requirements of the Foreign Account Tax Compliance Act, which mandates Foreign Financial Institutions (FFIs) to report information about U.S. account holders to the IRS. Ensuring FATCA compliance is crucial for institutions to avoid significant penalties and enhance global compliance practices.

Who should comply with FATCA?

Any Foreign Financial Institution (FFI) that has U.S. account holders is required to comply with FATCA. This includes banks, investment funds, insurance companies, and other financial entities operating outside the U.S. that hold accounts or assets on behalf of U.S. taxpayers.

How does KYCsphere’s FATCA Compliance Solution streamline the onboarding process for U.S. customers?

KYCsphere’s FATCA Compliance Solution utilizes a Customer Onboarding tool that identifies new U.S. customers/accounts based on U.S. indicia. It discovers substantial U.S. ownership and hidden beneficial ownership across complex legal entities, streamlining the onboarding process and ensuring compliance from the outset.

How does the KYCsphere solution handle ongoing monitoring and remediation for existing U.S. accounts?

The solution filters preexisting U.S. accounts to review profiles and ensure FATCA remediation when asset and transaction thresholds are exceeded. Enhanced Due Diligence tools can be employed for high-risk or uncooperative customers, ensuring comprehensive monitoring and compliance throughout the customer lifecycle.

How does KYCsphere’s FATCA Compliance Solution adapt to future tax regulations?

The solution is built to be cost-effective and adaptable, allowing institutions to manage FATCA compliance while provisioning for additional data fields and documents. This flexibility ensures that the compliance repository can evolve with future tax regulations in other countries without incurring significant capital expenditures.