Finance and tax executives in the banking industry expect compliance costs to increase significantly as a result of the Foreign Account Tax Compliance Act (FATCA) and say they will face numerous challenges trying to comply with the legislation given its broad scope and expanded reporting and monitoring requirements, according to a survey from KPMG LLP.
50% of 70 banks who participated in the survey said compliance costs would increase significantly as a result of the FATCA regime.
73% indicated it would be difficult for their business to become FATCA-compliant, with account identification requirements cited as the most significant compliance challenge for their enterprise.
Other statistics included:
- 41% stated that the process changes in operations would be the most challenging to implement, followed by 20% in IT.
- 58% claim to have started preparing for FATCA over across several departments.
- 38% stated that the biggest challenge was determining the scope of work required to comply with FATCA.
“CFOs and tax directors should be aware that most U.S. financial institutions and foreign financial institutions have concluded that implementation will take between 18-24 months and many banks are taking action now, working across various disciplines in order to prepare for FATCA,” said KPMG Washington National Tax principal Laurie Hatten-Boyd.
“The good news is that banks do have current documentation processes in place due to know your customer (KYC) and anti-money laundering (AML) rules,” continued Hatten-Boyd. “But they will need to refine current systems and processes — and in some cases develop new ones — for FATCA purposes in order to obtain, retain, and report the required information to the authorities when the rules go live.”
To read the full article, please go to http://www.reuters.com/article/2011/07/28/idUS192082+28-Jul-2011+PRN20110728.