Capgemini, business process management specialist Pegasystems and global law firm DLA Piper have collaborated to launch a joint compliance offering for financial institutions (FIs) that are subject to the US Foreign Account Tax Compliance Act (FATCA).
Under FATCA, which takes effect on 1 January 2013, foreign FIs will be required to determine if an account is owned by a US person, report data on the account to the US Internal Revenue Service (IRS) and possibly withhold or pay over to the US a 30% tax on so-called withholdable payments.
The partners comment that current Know Your Customer (KYC) and anti-money laundering (AML) systems in place today are not FATCA ready. Coupled with the high costs of FATCA implementation and time required for on-boarding, this means that many firms are re-evaluating their FATCA plans now to get prepared.
Under the joint offering, Capgemini and Pegasystems will work with FIs to co-ordinate their systems’ interface with Pegasystems technology and install customised legal advice developed by DLA Piper in the software. Capgemini and DLA Piper will review financial institution data, advise clients on enhanced FATCA due diligence, reporting and withholding requirements and ensure compliance with FATCA regulations.
“Many firms have re-evaluated their existing KYC programmes due to FATCA, given the high costs anticipated at around US$100m to US$200m to become compliant,” said Reetu Khosla, director of risk, fraud and compliance at Pegasystems.
“Organisations are looking for a complete view of their customers to drive faster time to revenue in the on-boarding process. Institutions are addressing ever-growing regulatory demands by choosing a unified platform, such as Pega’s KYC solution, that is agile enough to ensure compliance to existing regulatory policies that are country, product and line of business specific.”
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