20 May Can Your FATCA/CRS Reporting Pass a Health Check in the Age of COVID-19?
Four Festering Ailments Troubling FATCA/CRS Reporting Filers
These are testing times for financial institutions coping with changes in the regulatory reporting landscape due to COVID-19 disruptions. Filers of FATCA/CRS reporting are not immune to such changes. Challenges abound especially around the complex, multi-jurisdictional requirements under CRS.
Having managed to get through the first year or so of CRS reporting deadlines, many organizations are waking to a new reality. Tax authority reporting is challenging and getting more so. It is no longer enough just to hit the CRS filing deadlines (everyone’s initial concern). Now regulators are ramping up their expectations for reporting accuracy.
Firms that have been surviving CRS compliance by throwing a lot of resources at piecemeal approaches, were just beginning to reassess the situation when the pandemic hit. The crisis makes everything more difficult and some little ailments are beginning to fester. If organizations do not take treat these ailments, they could blossom into full-fledged infections that threaten compliance health.
Consider, for example, four of the ailments bothering FATCA/CRS filers today.
Ailment #1: Remote Operation Illness
Financial institutions the world over are learning what it is like to operate with 100 percent remote workforces. This situation has brought areas of operational weakness into high relief. For FATCA/CRS reporting, organizations must filter, classify, and report on large volumes of account data across multiple jurisdictions. Under crisis, organizations’ overreliance on manual processes and utilization of stitched-together technologies for FATCA/CRS reporting produce symptoms of operational weakness.
To heal this remote-operation illness, organizations should seek an end-to-end, automated solution that encompasses both FATCA and CRS requirements. The technology should work seamlessly without need of undue manual intervention. In addition, under COVID-19 operating conditions, organizations are now beginning to seek the benefits of moving their regulatory reporting to the cloud. But they must do so securely. So, any FATCA/CRS solution should be secure and cloud-enabled.
Ailment #2: Schedule Anxiety
COVID-19 is causing a reshuffling of schedules and regulatory reporting deadlines across the panoply of global financial and risk reporting requirements that is making organizations dizzy. For example, as of this writing, about one third of CRS jurisdictions have issued reporting deadline extensions, the other two thirds have not… so far. Dealing with this kind of change is especially stressful for those reporting centrally for multiple jurisdictions. Financial institutions must weigh up the pros and cons of how to handle these extensions and many are recognizing the limitations of their reporting technologies to adapt flexibly to such changes.
To treat schedule anxiety, firms should envision a holistic automated FATCA/CRS solution that accurately processes account data and produces requisite reports on demand. With a flexible automated solution in place, organizations have confidence that they can quickly and seamlessly adjust to changing reporting deadlines when they occur.
Ailment #3: Motion Sickness
COVID-19 is not only causing schedule changes, it is also causing certain tax authorities to alter the list of jurisdictions that they require be reported. These changes require significant adjustment to the reporting engine and output. For example, on 22 April 2020, HMRC (Her Majesty’s Revenue and Customs) updated the list of jurisdictions under CRS on whose tax residents financial institutions must report by 31 May 2020; there were both deletions and additions to the list. Filing institutions are feeling queasy as they rush to get these changes done in time.
To calm this distress, financial institutions should expect a FATCA/CRS solution where the provider updates the solution within days of such major changes.
Ailment #4: Refiling Disease
As CRS compliance matures, one of the most painful reminders is that organizations increasingly are being issued refiling demands by regulators. This is a disease borne by evolution. At first, regulators’ primary concern was receiving adequate XML reports on time. But now, regulators increasingly are turning their attention to quality, and many organizations are being called on the proverbial carpet. Having to manage regulators’ refiling requests is taxing financial institutions’ resources. Often their approaches to FATCA/CRS reporting impair their ability to quickly discover and correct errors.
To treat the refiling disease, organizations should ensure that their regulatory reporting solution for FATCA/CRS enables them to generate point-in-time datasets on demand and delivers deep data transparency and auditability.
Pass the FATCA/CRS Health Check With AxiomSL
AxiomSL’s FATCA/CRS solution on its cloud-enabled ControllerView data integrity and control platform enables financial institutions to avoid these ailments altogether. Taking the right approach to FATCA/CRS implementation can give your organization a clean bill of health and streamline your regulatory reporting in the age of COVID-19.
To health-check your FATCA/CRS reporting, contact us today.