Overview of technical challenges and possible solutions when
Transcript of Overview of technical challenges and possible solutions when
Overview of technical challenges and possible solutions when implementing FATCA requirements to the existing KYC process.
Ljubica Grgic, Detecon
Thomson Reuters GRC FATCA SeminarDubai, 11th June 2012
Content
1 FATCA general overview
2 Challenges at implementation
3 Holistic implementation approach
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1 FATCA overview
To fulfill the imposed FATCA requirements, three ma in work packages are necessary:
1 FATCA overviewAccount Identifcation
(KYC Process)Account Identifcation
(KYC Process) ReportingReporting WithholdingWithholding
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1 General FATCA challenges
There are three main challenges for FFI’s, when it comes to implementing FATCA.
Challenges for FFI’s
FATCAChallenges
Time
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New & Complex
ChangingRegulation
Challenges
1 Working areas of an FFI at a FATCA implementation
An integrated implementation approach enables you t o address all FATCA requirements comprehensively.
Account Identifcation(KYC Process)
Account Identifcation(KYC Process) ReportingReporting WithholdingWithholding
FATCA
working
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areasD
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1 The relevance of the Account Identification proces s (KYC)
1. Early planning gives time to react and adapt.
2. Early -adapted KYC shows FATCA-compliance, and acts as a role model.
FATCA–compliant Account Identification is key for a successful implementation.
AccountIdentifcation
(KYC Process)
AccountIdentifcation
(KYC Process)ReportingReporting WithholdingWithholding
2. Early -adapted KYC shows FATCA-compliance, and acts as a role model.
3. Cost of compliance could be minimized using a standardized and tool-assisted approach.
4. Quality and costs of reporting and withholding strongly depend on a high-quality KYC process.
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Content
3 Holistic implementation approach
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2 Challenges at implementation
FATCA general overview
3 Holistic implementation approach
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2 Challenges of adapting the account identification process (I/II)
FFIs will face several challenges within the KYC pr ocess, especially when performing the review of existing accounts.
Challenges at implementation
AccountIdentifcation
(KYC Process)
AccountIdentifcation
(KYC Process)ReportingReporting WithholdingWithholding
� Adaption of existing KYC processes is highly complex and interdependent
� Significant impact on operations, client relationships and services
� Significant administration effort
� Constant monitoring of the different criteria, exceptions and requirements
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� Requirements are complex and related to changes in business processes, systems and data
� Strict timeline leaves little scope for delayed action
2 Challenges of adapting the account identification process (II/II)
Implementing a FATCA-compliant KYC can bear challen ges and risks.
AccountIdentifcation
(KYC Process)
AccountIdentifcation
(KYC Process)ReportingReporting WithholdingWithholding
Challenges at implementation
� Reconciliation, upload and centralized preparation of data for review may lead to unforeseen work load
� Initial assessment of relevant data sources is prerequisite for the review of existing accounts and needs time
� Identification of beneficial owners in complex acco unt structures (trusts, foundations, entity accounts) require special knowledge and are more time consuming
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knowledge and are more time consuming
� Potential negative impact on client relationships could result in client frustration
Content
3 Holistic implementation approach
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2 Challenges at implementation
FATCA general overview
3 Holistic implementation approach
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3 Implementation approach – a selection
FATCA requirements impact a wide range of processes and applications. Therefore, a clearly structured approach is necessa ry, in particular for the KYC process.
AccountIdentifcation
(KYC Process)
AccountIdentifcation
(KYC Process)ReportingReporting WithholdingWithholding
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3 Implementation approach – a selection
• Detection of all relevant accounts, e.g. trusts and joint accounts
• Identification of “sham” account structures
Beside the „simple“ cases, more complex situations must be handled properly, as well.
AccountIdentifcation
(KYC Process)
AccountIdentifcation
(KYC Process)ReportingReporting WithholdingWithholding
• Identification of “sham” account structures
• Identification of complex BO-structures
• Recognition and review of related accounts
• Handling of “joint accounts” for review and reporting
• Maintenance of valid waivers
• Combination of both reporting regimes : existing QI and FATCA
• Support for internal or external audit processes• Support for internal or external audit processes
• …
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Contacts
For additional information please contact
Waiel Al-QaimiManaging Partner - MENA
Detecon International GmbH
Ljubica GrgicSenior Consultant
Detecon (Schweiz) AGLöwenstrasse 1
Dr. Wolfgang GöbHead of Business Development
Software Daten Service GmbH Rennweg 97-99
Detecon International GmbHHazaa Bin Zayed StreetP.O.Box 52612 Abu Dhabi, United Arab EmiratesPhone: +971 (2) 443 4778Fax: +971 (2) 445 3801Mobile : +971 50 811 [email protected]
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Disclaimer
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