Business information group Thomson Reuters has become the latest group to launch a solution aimed to helping corporates and other organistions meet their obligations under the forthcoming US Foreign Account Tax Compliance Act (FATCA).
The group says the new solution brings together technology already widely used by organisations around the world to solve issues with regulatory compliance, tax documentation and tax reporting and will enable organisations to identify, maintain and validate their customer records to assist in FATCA compliance.
It is estimated that tax avoidance by US citizens and entities using offshore bank accounts and other vehicles held at foreign financial institutions (FFIs) costs the US government around US$500bn a year. FATCA rules, effective from 1 January 2013, requires all FFIs to collect, manage and report all information that could reasonably point to individual’s liability for US taxation to the Internal Revenue Service (IRS) – a process estimated to cost foreign banks, with more than 25 million accounts, at least US$250m to implement, according to the European Banking Federation (EBF) and the Institute of International Bankers (IIB).
“The real costs for FATCA compliance, on an individual firm basis, will vary based on the state of the client account data in question and the technology and systems framework in place to store that data,” said Virginie O’Shea, analyst, Aite Group. “Those with a more robust legal entity or client data management framework or anti-money laundering (AML), or Know Your Customer (KYC) assessment scheme in place are likely to be better positioned to tackle the challenge.”
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However, a London summit on the industry’s introduction of the technology cautions that testing and acceptance are still at an early stage and firms should proceed with caution.