Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, has announced the launch of a solution to help institutions fulfil and comply with their obligations under the forthcoming US Foreign Account Tax Compliance Act (FATCA).
Supported with the full power of Thomson Reuters content and solutions assets from its governance, risk and compliance, and tax and accounting businesses Thomson Reuters for FATCA Solution, brings together market leading technology already widely used by organisations around the world to solve issues with regulatory compliance, tax documentation and tax reporting.
It 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) is costing the US government around $500-billion a year.
Under FATCA rules, which become effective on 1 January 2013, all FFIs will be required 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 $250-million ($10 per account) to implement, according to the European Banking Federation and the Institute of International Bankers.
“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,” says 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.”
The impact of FATCA will be widely felt across the financial industry with banks, investment funds, insurance companies, mutual funds, broker-dealers, custodians, intermediaries and private equity firms all having to comply.
FATCA places significant reporting requirements on firms to identify US account holders. This will create significant operational and systemic pain points, particularly around on-boarding, classifying and documenting new clients, and in gathering sensitive data from a variety of structured and unstructured sources.
Thomson Reuters for FATCA Solution comprises modules for on-boarding, featuring US indicia search; self-assessment, featuring W-8 and W-9 form preparation and collection; and tax information reporting, featuring forms 1042, 1042S and 1099.
The solution also features configurable regulatory and management reporting. It is designed to integrate easily with organisations existing processes and technology and is offered as an installed or hosted solution.
“FATCA compliance will require a multi-disciplinary approach that will touch many points across an organisation,” says Laurence Kiddle, commercial director, FATCA, Thomson Reuters.
“Thomson Reuters has brought together a number of leading tried and tested technologies, spanning governance, risk, compliance, tax and accounting to enable compliance with this new direction in taxation regulation.
“This approach makes us uniquely placed to provide a full, and modular, solution that can help institutions fulfil and comply with the obligations they are under and supports every stage of the challenges they will face as a result of FATCA.”