Is Your FATCA Compliance Program in Full Performance Mode?

FATCA Compliance and the Great Expectation / Preparation Divide

The clock is ticking. There’s under a year until first stage compliance. At high level it might look like preparations are well advanced. But is real operational progress always as good as internal reports suggest? Find out more.

With less than a year to go until first stage compliance, the clock is ticking. Financial institutions and their management may believe preparations are fully underway. But is real operational progress on the ground always as well advanced as internal reports might suggest?


FATCA – from distant prospect to imminent reality

The first demands of FATCA regulatory compliance will impact in less than a year. For some institutions, the strategic decision has already been taken. Compliance is too complex and expensive to be justified. These institutions will not continue to service customers who fall within the FATCA scope. But for all others, FATCA compliance is a must in order to remain competitive and relevant in the market. These institutions must address the following questions:

  • What is the quality and impact of the compliance actions being taken on the ground to achieve compliance?
  • How close is the institution to achieving compliance within the regulatory timetable?
  • How does the institution’s progress compare with industry peers?


Background – the IRS moves from talk to walk

It’s now universally known that on March 2010, the Foreign Account Tax Compliance Act (FATCA) was enacted by the US government. The goal is to prevent tax evasion by US persons who use foreign financial institutions (FFIs) to hide US sourced income and assets. Under FATCA, these FFIs must identify and report all US persons including any substantial US owners of nonfinancial entities to the IRS. While final regulations form the basis for FATCA implementation, certain countries negotiated Inter Governmental Agreements (IGAs) to ease the burden of implementation and to leverage the existing tax and information exchange mechanism. Today there are 2 models of IGAs as shown in this Point Of View.

A great expectation / preparation divide prevails. With the first FATCA compliance deadline fast approaching, financial institutions (FIs) lack transparency on how close they are to achieving FATCA readiness.