acfs and bae webinar - the rise of gatca 7-29-14
DESCRIPTION
Slides for a webinar conducted on GATCA preparedness and compliance, by BAE Systems Applied Intelligence and ACFCSTRANSCRIPT
The Rise of GATCA
Preparing for the new reality of global tax compliance and account reporting systems
The Rise of GATCA
Preparing for the new reality of global tax compliance and account reporting systems
ACFCS WebinarJuly 29, 2014
Presented ByBrian Kindle - ACFCS
Laurie Gentz – BAE Systems Applied Intelligence
Brian KindleExecutive Director
Association of Certified Financial Crime SpecialistsMiami, FL
Certification, News, Guidance, Training, Networking
The Credential That Demonstrates Competency and Skill Across the Financial Crime Spectrum
CFCS Certification
Laurie GentzSenior Business Solutions Consultant
BAE Systems Applied IntelligenceSend questions/requests for Laurie to: [email protected]
WHAT IS FATCA?• Foreign Account Tax Compliance Act, a US law enacted in 2010
• Wide array of non-US financial institutions must identify accounts they hold for US persons, report them to Internal Revenue Service (or their domestic tax authorities under certain intergovernmental agreements, or IGAs)
• Non-US institutions are generally required to:• Implement new onboarding procedures • Review pre-existing accounts and classify based on FATCA status• Collect data and documentation to verify US personhood• Report certain data on accounts and account holders• Monitor accounts on ongoing basis• Close non-consenting or recalcitrant accounts• Apply 30% withholding, although US withholding agents will bear primary
responsibility
• Model I and Model II IGAs laid groundwork for GATCA system
WHAT IS GATCA?
Global Account Tax Compliance Act Dubbed global FATCA or GATCA
Goal is to have a single global standard
on automatic exchange of information
Each country will need to enact the necessary domestic legislation and entered into appropriate international agreements to allow exchange of information
WHO IS THE OECD?
Organization for Economic
Co-operation and Development
• Mission – to promote policies that will improve the economic and social well-being of people around the world
• Provides a forum in which governments can work together to share experiences and seek solutions to common problems
• The common thread of our work is a shared commitment to market economies backed by democratic institutions and focused on the wellbeing of all citizens.
• The OECD goal: make life harder for the terrorists, tax dodgers, crooked businessmen and others whose actions undermine a fair and open society
Est. 1961, Membership: 34 Countries
Enhanced Tax and Financial Transparency
US FATCA
Qualified Intermediary
Program
FATCA “pilot” between 5 EU
nations
OECD CRS
UK tax exchange with
territories, Crown
Dependencies
Other national efforts - China
and Hong Kong, France
and territories
Existing tax treaties and information
exchange agreements
• Are staff, from client relationship managers to AML team, prepared to spot activity indicative of tax evasion?• Red flags, EDD for higher-risk customers, questions to ask new prospective customers
• Example - Customer closes accounts just before GATCA reporting deadline• Create exception report?• File a suspicious activity/suspicious transaction report?
• Enable lines of communication and internal reporting structures for customers with potential violations – GATCA “grey lists”
• For law enforcement, unprecedented new information on offshore accounts, but access likely to be very limited in many jurisdictions
• For institutions, deeper understanding of customer’s tax status may improve AML assessment and lead to fuller understanding of risks
GATCA as Financial Crime Tool
• 45 countries already in “Early Adopters Group” – commits them to timetable with reporting by 2017
• More than 20 others have publicly committed to adoption
• Late October – OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes • 122 nations and jurisdictions will meet • More commitments expected in lead-up to event, may be signing
ceremony for multilateral agreements
• http://www.oecd.org/ctp/exchange-of-tax-information/standard-for-automatic-exchange-of-financial-information-in-tax-matters.htm
What’s Next for GATCA Adoption?
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The Rise of GATCAThe new reality of global tax compliance
and account reporting systems
Laurie Gentz
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DISCUSSION TOPICS
Cha
lleng
es
KNOW THE HURDLES Det
ails
, Dat
es STANDARDS …REQUIREMENTS …DUE DATES …
Get
ting
Rea
dy
RECOMMENDATIONS
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KEY CHALLENGES
How to ensure consistency across jurisdictions …
Interpretation by country may vary …
The US will not be an early adopter …
Rules for tax residency are different for each country …
Complying with both reciprocal model one IGAs & bilateral agreements
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NEED TO KNOW
OECD has adopted the FATCA model
Designed to create a single global reporting standard (CRS)
Published full details on July 21, 2014
Standard for Automatic Exchange of Financial Account Information in Tax Matters
Subsequent changes may become necessary as jurisdictions gain more experience with the implementation of the standard.
More detailed commentary that is being developed
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OVERVIEW - COMMON REPORTING STANDARD
WHO WHAT
Banks Custodians Brokers Certain collective investment
vehicles Certain insurance companies Etc.
Investment income Including interest, dividends,
income from certain insurance contracts and other similar types of income
Account balances and sales proceeds from financial assets
Reportable accounts include accounts held by individuals and entities (which includes trusts and foundations)
The standard includes a requirement to look through passive entities to report on the individuals that ultimately control these entities.
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OECD CRS DATES
For all New Account Openings Capture and Record tax residence Report in 2017
Due diligence procedures need to be in place for
identifying high-value pre-existing individual accounts
The first exchange of information in relation to new accounts
and pre-existing individual high value accounts will take place
Perform Due Diligence for low-value pre-existing
individual accounts and entity accounts
Information about pre-
existing individual low
value accounts and entity
accounts
- by the end of Sept 2017
or Sept 2018
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FATCA / GATCA – WHAT IS THE SAME?
Checking existing customers to see if more data is necessary
Setting up new customer onboarding procedures to capture critical identifying data
F
G
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FATCA / GATCA – WHAT IS DIFFERENT?
FATCA GATCA
• FATCA taxes on the basis of citizenship
• US tax law
• Non-compliant entities - significant tax withholding rate of 30%
• Exemptions for small local institutions, charities, pensions and collective investment entities
• GATCA / CRS taxes on the basis of residence
• Non-compliant entities – penalty unknown
• Multi-lateral jurisdictions
• KYC - Increased data
collection
• Exemptions are still being assessed –
but expected to be less than FATCA
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HOW WE CAN HELP
Consolidated view of customers and accounts
from multiple systems
Ongoing monitoring should the data
change
Supplied classification of citizenship
Delivered workflow process for data &
document collections
Will prepare an upload file on their behalf to the IRS
Provided aggregation of the accounts they
needed to report
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RECOMMENDATIONS
Start internal discussions now• Regulatory dates will be here
before you know it
• Will you expand existing FATCA processes?
• Will new processes/ procedures need to be implemented?
• Who will own the OECD CRS process?
Collect Data • Does your institution collect all
relevant data points?
• Do processes need to change to collect more data/documents?
Select the right technology partner
• Complicated tax laws require a technology enabled solution
• US Financial Institution may end up reporting to several different tax authorities
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The Rise of GATCAQuestions?
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The Rise of GATCAThanks for Attending!
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BAE Systems Applied IntelligenceSurrey Research ParkGuildfordSurreyGU2 7YPUnited Kingdom
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This document (<projectreference><documentnumber>) contains confidential and commercially sensitive material which is provided for the Authority's internal use only and is not intended for general dissemination.
The information contained herein pertains to bodies dealing with security, national security and / or defence matters that would be exempt under Sections 23, 24 and 26 of the Freedom of Information Act 2000 (FOIA). It also consists of information which describes our methodologies, processes and commercial arrangements all of which would be exempt from disclosure under Sections 41 and 43 of the Act.
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