How Tax Administrations Handle FATCA, CRS Non-Compliance
?OECD Report Details Preventative and Corrective Measures for Financial Institutions’ FATCA and CRS Non-Compliance
Tax administrations can use a combination of detective, preventative and corrective measures to assess and treat Foreign Account Tax Compliance (FATCA) and Common Reporting Standard (CRS) non-compliance, according to the “Guide on Promoting and Assessing Compliance by Financial Institutions” (the Guide). The report is published by the Organization of Economic Cooperation and Development’s (OECD) Forum on Tax Administration.
Tax administrations assess financial institutions’ (FIs) compliance from the information they provide. The Guide states that where the risk level is assessed to be relatively high and the root cause analysis points towards a systematic and behavioral issue with an FI or a cluster of FIs, tax administrations may use more targeted compliance measures and thematic reviews.
Administrators search the content for “visible errors” including:
When studying compliance, the Guide notes that behavior of FIs can be broadly categorized into four groups:?
Tax Administrations consider the behavior of the FIs in the context of their overall compliance environment for purposes of applying appropriate risk treatments. They may also
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For FIs that are “generally compliant” but make minor mistakes, tax administrators may offer? timely assistance and education, as well as? warnings or penalties. For FIs that are considered negligent, making similar reporting errors repeatedly, or deliberately non-compliant with FATCA and CRS reporting, administrators may institute mandatory compliance programs.?
Among the stronger methods that may be used in those cases are:
Clearly, FIs need to practice due diligence in their FATCA and CRS reporting, or face the consequences.
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Nicely written piece. Thank you.
Founder, Consultant @ Swanson Consulting | Principal Consultant, Speaker
3 年Perhaps there should be some additional discussions around FATCA and CRS in general. For example, how to reduce or eliminate discrimination caused by additional risk of non-compliance by the FI. Fines and penalties to the FI under CRS will just mean that FI's will close the door completely to non-resident customers. That's is what we have learned from FATCA. I cannot find a Life Insurance company that will deal with a US cit. in Switzerland. Secondly, the OECD and USG need to consider privacy and oversight. Imagine what will happen when non-US person people in Germany find that their bank data was being given to the US Treasury without them knowing. There is no public transparency on what data is being shared. It is all pretty cloak & dagger and blatantly violating GDPR. Lastly, the OECD and USG should subsidize FIs in poor countries to finance CRS/FATCA implementation. At the end of the day, the bank customer pays for this. It is just criminal when the paying bank customer earns $100/mo.