Preparing for FATCA

Course Overview:

What is FATCA? The Foreign Account Tax Compliance Act (FATCA) is a new and draconian US law aimed at foreign financial institutions (FFIs) and other financial intermediaries to prevent tax evasion by US citizens and residents through the use of offshore accounts.

FATCA is a very significant step in the fight against tax evasion and will have an equally significant impact on all fund managers and institutions doing business with US citizens or US entities. In essence the US is compelling most of the rest of the world to help it identify what it calls “recalcitrant” citizens/entities who do not pay their US tax. Many countries, including the UK, are doing so willingly and it seems certain a UK version will follow if FATCA succeeds in collecting an estimated US$900m annually in extra tax revenue over the next decade.

This is a major compliance task for all financial institutions with US client connections and will require considerable implementation work for most against fairly tight deadlines. Whilst it has taken a while to fix the FATCA timetable and there have been delays in some of the deadlines, this particular train is now at the station. Almost everyone will have to climb on board and almost everyone must carry out the appropriate and often expensive procedural work to pay the fare.

This is an introductory level course which will focus on the practical implementing challenges that firms affected by FATCA are likely to face.

Course Content:

FATCA Requirement

• What does it mean?
• Implementation Timescale
• What is an FFI?
• Distinguishing between FFI’s & NFFe’s

Examples/Discussion Points

IRC Guidance

• What is the current position?
• What are the implications?
• UK guidance
• Determining whether an account is US or not
• Practical examples

Examples/Discussion Points

Holistic Approach

• Data management: Cleansing, quality, best practice of data sets
• Communication approach and plan
• Channels, considerations, challenges, outbound, inbound
• FATCA Pillar 1 Quantitative requirements
• How existing processes and procedures (including AML and KYC) will need to change
• Extra-territoriality
• Managing potential conflicts with local privacy laws

Examples/Discussion Points

FATCA from the FFI’s perspective

• The process for entering into an FFI agreement
• Reporting US account information to the IRS
• Handling transactions with other FFIs
• The need for identifying FATCA information
• Exemptions from FFI status

Examples/Discussion Points

Emerging issues for FFIs concerning FATCA compliance

• Due dates: FFIs
• Challenges of FATCA implementation for FFIs
• Topical points – e.g. does it go far enough?
• Classification rules
• Decision trees

Examples/Discussion Points

Putting it all together

• What next?