Thomson Reuters debuts FATCA compliance kit
Thomson Reuters has launched a tool to help financial institutions comply with the US Foreign Account Tax Compliance Act, widely known as FATCA, which requires banks to identify their US customers for tax purposes.
FATCA took effect on 1 January 2013. Under its terms, all foreign financial institutions are required to collect, manage and report all information that could reasonably point to individual liability for US taxation to the Internal Revenue Service. The penalty for non-compliance with FATCA is a 30% withholding tax applied to payments of US-related income.
It is estimated that the cost to banks of compliance with the legislation will be $250 million, which amounts to approximately $10 each for the 25 million accounts covered by the rules.
The Thomson Reuters technology includes modules for on-boarding, featuring US indicia search, self-assessment, form preparation and collection and tax information reporting. The tool includes options for configuring and controlling regulatory and management reporting. It is available both as an installed or hosted solution.
“FATCA compliance will require a multi-disciplinary approach that will touch many points across an organisation,” said Laurence Kiddle, commercial director, FATCA, Thomson Reuters. “Thomson Reuters has brought together a number of tried and tested technologies, spanning governance, risk, compliance, tax and account to enable compliance with this new regulation. This approach will help institutions fulfil and comply with the obligations they are under as a result of FATCA.”
The introduction of FATCA has divided banks over their response, with some firms dealing with the act by refusing to serve US clients. However, in September Davide Ferrare, partner, retail and wholesale banking, financial services at business technology and consulting firm CSC told Banking Technology that compliance was not optional in the longer term.
“Saying ‘no’ to US clients? That’s fine, but what happens when the UK introduces a FATCA, and then Germany, and then France, and so on … who will be your customers then?” he said. “You need to look ahead and be aware of the context, not just isolated incidents, to prepare effectively.”