New York, NY (PRWEB) January 09, 2012
Although the government has now issued an extended implementation deadline, Ernst & Young says banks should remain steadfast in their Foreign Account Tax Compliance Act (FATCA) compliance efforts – or risk unwanted challenges.
Since compliance will impact every aspect of a financial institution’s business, including touching upon other regulatory compliance initiatives, it will require a sweeping organizational commitment and hands-on involvement to be successful, according to Barbara Angus, an Ernst & Young principal in its International Tax Group.
“The number one benefit of focusing on FATCA today is the ability to plan for FATCA compliance in an orderly fashion,” said Angus. “By beginning today, an institution maximizes its ability to be able to coordinate these processes and coordinate these changes that will need to be built into their systems for different reasons.”
Under the revised approach, organizations will have additional time to build the systems needed to fully comply with FATCA by January 2013, which Ernst & Young says is critical. Institutions that fail to meet the new compliance standards will be subject to strict penalties, such as withholding on certain types of payments and gross proceeds from the disposition of US securities.
To help minimize costs and avoid a negative impact on client relationships, US and foreign financial institutions must start now to shrink the effort of FATCA assessment and implementation, according to Erol Mustafa, a partner in Ernst & Young’s Information Technology Risk and Assurance practice.
Mustafa outlined three key considerations:
1. Execute a government structure that recognizes FATCA isn’t just a tax problem but involves all teams engaged with customer activities, such as operations and data.
2. Perform an impact assessment that recognizes the breadth and depth of FATCA’s impact across geographies and customer channels.
3. Understand areas where the financial institution can minimize the effort behind FATCA implementation.
Get the latest FATCA news and information about Ernst & Young’s approach to achieving FATCA compliance at http://www.ey.com/FATCA.
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