Foreign Account Tax
Compliance Act (FATCA) Workshop
Association of International
Bank Auditors
Technical Overview – Jon Lakritz, PwC
Internal Controls and Certification Considerations
– Alan Pisano, PwC
June 14, 2012
New York, New York
Agenda
FATCA Technical Overview
1.
General Overview and Concepts
2.
Account Due Diligence
3.
Verification by Responsible Officer
4.
FATCA Withholding
5.
FATCA Reporting
6.
Multilateral Agreements
7.
Timeline of Important Dates
8.
Forthcoming Guidance
General Project Approach
Internal Controls and Certification Considerations
2
FATCA Technical Overview
3
General Overview and Concepts
Congressional Action
Tax Haven Banks and U.S. Tax Compliance - 2008
ISSUE:
U.S. persons are using foreign
entities to invest and avoid U.S.
reporting and backup withholding.
Certifying to be foreign persons
Availing themselves of treaty
benefits
U.S. loses an estimated $100 billion
in tax revenues annually due to
offshore tax abuses.
Financial institutions may be
facilitating international tax evasion
5
Congressional Action
Tax Haven Banks and U.S. Tax Compliance – 2008 (Continued)
Recommendations:
Strengthen Reporting of Foreign Accounts Held by U.S. Persons.
Strengthen 1099 Reporting
Strengthen Audits
Penalize Tax Haven Banks that Impede U.S. Tax Enforcement
Attribute Presumption of Control to U.S. Taxpayers Using Tax Havens
Allow More Time to Combat Offshore Tax Abuses
Enact Stop Tax Haven Abuse Act
6
The Congressional Reaction- FATCA
What?
Why?
FATCA – Foreign
Account Tax
Compliance Act
What is the intent?
The purpose of FATCA is
to “detect, deter and
discourage offshore tax
evasion” by US citizens or
residents.
Create greater
transparency by
strengthening information
reporting and compliance
with respect to US
accounts.
Major functions impacted:
• Client on-boarding
• Tax reporting
• Tax withholding
• Governance
How?
What are the
consequences of being
noncompliant?
FATCA requires reporting to
the IRS certain information
on direct and indirect US
account holders.
FATCA imposes a 30 percent
withholding tax on
“withholdable” and
“passthru” payments made to
a recalcitrant account holder
or a non-participating FFI.
7
Five concepts you need to know
1) A Foreign Financial Institution is any non-US entity that:
1.
Accepts deposits in the ordinary course of a banking or similar business;
2. Holds as a substantial portion of its business financial assets for the account of others;
3. Is engaged (or holding itself out as being engaged) primarily in the business of
investing, reinvesting, or trading in securities, partnership interests, commodities,
notional principal contracts, insurance or annuity contracts, or any interest in any of
the above; or
4. Is an insurance company (or the holding company of an insurance company) that
issues or is obligated to make payments with respect to a financial account.
2) Financial account:
1.
Any depository account maintained by the financial institution,
2. Any custodial account maintained by the financial institution,
3. Any equity or debt interest in a financial institution that is an investment fund (other
than those that are regularly traded on an established securities market), and
4. Any cash value insurance contract and any annuity contract issued or maintained by
the financial institution.
8
Five concepts you need to know
3) US account – A financial account held by specified US persons or US owned foreign
entities.
4) US owned foreign entity – Any non-financial foreign entity (“NFFE”) with one or
more substantial US owners (a specified US person owning more than 10% of the
stock of a corporation or capital or profits of a partnership).
5) Specified US person - Any US person other than :
1) publicly traded corporation, 2) affiliates of a publicly traded corporation, 3)
exempt organization or IRA, 4) the United States, 5) US state, DC, or US possession,
6) any bank defined section 581, 7) REIT, 8) RIC or SEC registered company under
Investment Company Act of 1940, 9) common trust fund, 10) exempt trust under
section 664(c), 11) dealer registered under laws of US or US state, and 12) a broker as
defined in 6045(c)
9
Participating FFIs (“PFFI”)
To avoid the 30% withholding an FFI generally must:
• Enter into an agreement with the IRS to comply with certain requirements
• Under the FFI agreement, a PFFI will be required to:
- Obtain information on all account holders to determine which accounts are US
accounts
- Comply with required due diligence/verification procedures and certify
completion of such procedures
- Report information on US accounts
- Deduct and withhold a 30% tax on any “passthru payment” to recalcitrant
account holders and nonparticipating FFIs
- Comply with IRS information requests
- Attempt to obtain a waiver of applicable bank secrecy or other information
disclosure limitations or close the US account (if necessary)
10
Deemed-Compliant FFIs
• The proposed regulations have few true carve outs from FATCA but there are
two categories of entities with a potentially lighter compliance burden than
participating FFIs.
Registered Deemed-Compliant
FFIs
Certified Deemed-Compliant
FFIs
Must register with the IRS, agree to deemedcompliant criteria, and certify every 3 years to
its compliance.
Must certify to a withholding agent that it meets
the requirements on a Form W-8 and provide
any other required documentation.
•Local FFI
•Nonreporting member of
participating FFI group
•Qualified collective investment
vehicle
•Restricted fund
•Nonregistering local bank
•Retirement funds
•Non-profit organizations
•FFIs with only low value accounts
•Owner documented FFI
11
Account Due Diligence
12
Account due diligence rules to identify U.S.
account holders – Individual Accounts
Pre-existing individual accounts (only applies to FFIs, not USFIs)
• $50,000 or less – Certain accounts are exempt from review
• $50,000 to $1,000,000 – Search electronically searchable account information for US
indicia
• More than $1,000,000 (“high value accounts”)– Inquire into actual knowledge of
relationship manager; if certain required fields are not electronically searchable, also
search all other account information and documentation
New individual accounts (only applies to FFIs, not USFIs)
• Must collect documentation sufficient to establish account holder’s FATCA status (e.g.,
U.S. or non U.S.)
• Review all of the information provided at the opening of the account, including
identifying information collected under AML/KYC rules for indicia
• If an indicator of U.S. ownership is found, obtain additional documentation or treat
the account as held by a recalcitrant account holder
13
Account due diligence rules to identify U.S.
account holders – Entity Accounts
Pre-existing entity accounts
•
$250,000 or less – Excluded from review, until account balance exceeds $1,000,000
•
Search existing information / documentation on file to determine an account holder’s FATCA status.
Generally can rely on documentation and information collected as part of AML/KYC or existing
account opening procedures. However, if existing information / documentation is not sufficient,
must request additional documentation.
•
Passive NFFEs – Must identify substantial U.S. owners
New entity accounts
•
Upon account opening, request and obtain withholding certificates, documentary evidence, and
additional statements from entity account holders (e.g., letters of counsel, withholding statements,
statements made in account opening documents, etc.)
•
Must review all documentation collected upon account opening along with other information
collected as part of AML/KYC to determine the account holder's status under FATCA (i.e. U.S.
Entity, PFFI, NPFFI, Registered Deemed-Compliant FFI, Certified Deemed-Compliant FFI, Exempt
Beneficial Owner, Passive NFFE, U.S. owned foreign entity, Excepted NFFE, etc)
14
U.S. Indicia
Searches for U.S. indicia are used to identify U.S. persons that own accounts
An account holder has indicia of U.S. status if he:
1.
Is a U.S. citizen or resident
2.
Was born in the U.S.
3.
Has a U.S. residence or mailing address;
4.
Has a U.S. telephone number
5.
Has provided standing instructions to transfer funds to a U.S. based account
6.
Has granted power of attorney over the account to a person with a U.S. address
7.
Has a “care of” or hold mail address that is the sole address of account holder
15
Verification by the Responsible
Officer
Verification of Compliance
Certifications required of a “responsible officer”:
1.
To the best of the responsible officer’s knowledge, from August 6,
2011 until the date of certification, no formal or informal practices
or procedures were in place to assist account holders in the
avoidance of FATCA;
2. Within one year of the effective date of the FFI agreement, the
responsible officer is required to certify to the IRS that the
participating FFI has completed the review of all high value
accounts; and
3. Within two years of the effective date of the FFI agreement, the
responsible officer is required to certify to the IRS that the
participating FFI has completed the review of all other accounts.
17
Verification of Compliance
After initial certifications, the responsible officer of the
participating FFI will also need to periodically certify to the IRS:
1.
Conducted periodic reviews of the FFI's compliance with due diligence,
withholding and reporting obligations under the FFI agreement.
2.
The responsible officer may be required to provide certain factual
information and to disclose material failures with respect to the
participating FFI’s compliance with any of the requirements of the FFI
agreement.
18
FATCA Withholding
19
FATCA Withholding
Transactions and payments subject to FATCA
Withholdable Payments
• Interest and dividends paid on U.S. securities, and other US source
income
• Gross proceeds from sale of U.S. securities that generate interest or
dividends
• Excludes: certain short-term obligations, effectively connected
income, ordinary course of business payments, grandfathered
obligations
Foreign Passthru Payments
• Payment by a participating FFI of a withholdable payment or other
payment to the extent attributable to a withholdable payment.
20
FATCA Reporting
Reporting Requirements
2014 and 2015
(for calendar years 2013
and 2014)
Limited reporting due
30 September 2014 (for
accounts on record as of 30
June 2014) and
31 March 2015,
respectively.
Specified US persons
• Name
• Address
• TIN
• Account number
• Account balance
NFFEs that are US-owned foreign entities
• Name
• Address
• TIN
• Account number of entity
• Account number for each substantial
US owner
2016
(for calendar year 2015)
Reporting due 31 March
2016
• Above information plus US source FDAP income
2017
(for calendar year 2016)
Full reporting due
31 March 2017
Aggregate reporting
• Above information plus gross proceeds

FFIs must report aggregate amounts paid in 2015 and 2016 to non-participating FFIs

Concession for delay of withholding on foreign (non-US) passthru payments
22
Multilateral Agreements
23
Multilateral efforts
The joint statement – an overview
• US government considering intergovernmental agreements (agreements with
countries referred to as “FATCA Partners”) to:
- Avoid legal impediments to compliance, by not requiring a FFI established
in the FATCA partner to
◦ Terminate the account of a recalcitrant account holder;
◦ Impose passthru payment withholding on payments to recalcitrant
account holders;
◦ Impose passthru payment withholding on payments to other FFIs
organized in the FATCA partner or in another jurisdiction with which
the United States has a FATCA implementation agreement.
• The goal is to simplify implementation and reduce cost to the FFI.
• France, Germany, Spain, Italy and UK issued a joint statement with US.
• Press has reported that Ireland, Mexico, Luxembourg and others are
interested.
24
Timeline of Important Dates
25
FATCA timeline – for FFIs (for agreements effective July 1, 2013)
2012
2013
2014
Jan 1 2013 – FFI can enter
into FFI Agreement online
(Note 1)
Jul 1 2013 – IRS
encourages FFIs to
sign up by July 1
2013 to ensure
readiness by
Jan 1 2014
FFI
Governance
Due
diligence for
pre-existing
accounts
Withholding
(1)
(2)
(3)
(4)
Jul 1 2014 –
Certify
completion of
review of preexisting high
value individual
accounts
(Note 2)
Jul 1 2015 –
Certify completion
of account
identification
procedures and
documentation
requirements for all
other pre-existing
individual accounts
Jul 1 2014 –
Complete due
diligence for any
pre-existing account
holder that is a
prima facie FFI
Jul 1 2015 –
Complete due
diligence for
all other
pre-existing
accounts
2016
2017
Jan 1 2016 – Two-year
transition period ends for
"Limited FFIs" and "Limited
Branches"
Jul 1 2014 –
Complete due
diligence for high
value accounts
Jul 1 2013 – New account opening
procedures must be in place to
identify US accounts and classify nonUS entity accounts(Note 3)
Due
diligence
for
new
accounts
Reporting
2015
Jan 1 2013 –Cut-off date for
grandfathered obligations
Jan 1 2014 – FATCA
withholding begins on US
source FDAP income
Sep 30 2014 – Begin
limited reporting for US
accounts and aggregate
reporting for recalcitrant
accounts (calendar year
2013) with respect to
accounts identified as of
June 30 2014 (Note 4)
Jan 1 2015 – FATCA
withholding begins on gross
proceeds
Mar 15 2015 – Form
1042 FATCA reporting
begins
Mar 15 2015 –
Begin Form 1042-S
FATCA reporting
(calendar year 2014) for
US source FDAP income
Jan 1 2017 – FATCA
withholding expected to
begin for foreign passthru
payments
Mar 15 2016– Form 1042-S
reporting (calendar year
2015) now includes gross
proceeds; as well as foreign
reportable amounts paid to
NPFFIs
Mar 15 2017 – Form
1042-S reporting
(calendar year 2016)
expected to include
foreign passthru
payments
Mar 31 2016 – Reporting
on US accounts (calendar
year 2015) required to
include income associated
with the US account
Mar 31 2017 –
Reporting for US accounts
(calendar
year 2016) required to
include proceeds paid
IRS may make the online FFI registration system available before Jan 1 2013
to US accounts
As part of the first certification, FFI must certify that it did not have any procedures in place from August 6, 2011 that would assist account holders in the avoidance of FATCA
New accounts are generally permitted a 90-day grace period before being treated as recalcitrant
Limited reporting includes name, address, TIN, account number, and account balance of each specified US person who is an account holder. For account holders that
are NFFEs that are US owned foreign entities, report name, address and TIN (if any) of such entity and each substantial US owner of such entity
26
FATCA timeline – for US withholding agents (including USFIs)
2012
Due
diligence for
pre-existing
and new
entity
Accounts
(Notes 1
and 2)
2013
Reporting
2015
2016
2017
Jan 1 2015 –
Complete due diligence on
pre-existing
non-US entity accounts
Jan 1 2013 – New account
opening procedures must be in
place to classify entity-owned
accounts
Jan 1 2013 – Cut-off date for
grandfathered obligations
Withholding
2014
Jan 1 2014 – FATCA
withholding begins on US
source FDAP income,
including payments to preexisting entity accounts held
by prima facie FFIs and
documented NPFFIs
Mar 15 2014 – Begin
reporting on
substantial US owners
of US-owned foreign
entities (calendar year
2013) (Note 3)
Jan 1 2015 – FATCA
withholding begins on gross
proceeds
Mar 15 2015 – Begin
Form 1042 FATCA
reporting
Mar 15 2016 – Form
1042-S reporting (calendar
year 2015) now includes
gross proceeds
Mar 15 2015 – Form
1042-S reporting
(calendar year 2014) on
US source FDAP income
(1) US Withholding Agents only perform due diligence on entity clients, not on individuals
(2) The due diligence process must be completed prior to making a withholdable payment
(3) Reporting requirements include name of the US owned foreign entity; and name, address and TIN of each substantial US owner
27
Forthcoming Guidance
28
Forthcoming guidance
• Draft / Final Forms W-8 and W-9
- Draft Forms W-8BEN-E (entities) and W-8BEN (individuals) were released on
June 6, 2012.
• Draft / Final Forms 1042 and 1042-S
• Draft / Final FFI Agreement
- Draft FFI agreement is expected to be released June 2012
• Final regulations
- Expected Q3/Q4 of 2012
• Model intergovernmental agreements
**The IRS is not obligated to adhere to this schedule, but they did
announce their intention to issue guidance by these dates.
29
General Project Approach
30
Phased Approach to FATCA Compliance
Phase 1
Current State
Analysis and
Impact
Assessment
Phase 2
Future State and
Roadmap
Development
Phase 3
Implementation
and Remediation
Entity
Classification
Functional Impact
Analysis
• Determine the population of legal entities to be assessed
• Analyze FATCA relevant characteristics of the legal entities
• Identify impacted entities and their classifications and FATCA obligations
• Interview with key personnel across relevant internal functions (e.g., client onboarding, AML/KYC, withholding, reporting, technology, etc.), to assess FATCA
process, data, systems gaps
Business Impact
Analysis
•
Review other business processes , procedures, and relationships to assess
significant business impacts as it relates to external stakeholders (e.g.
Administrators, Custodians, Distributors, etc.)
Project
Management
•
Create project governance structure (i.e., working group, etc.)
•
Track and communicate progress, issues, and risks
•
Identify critical options and strategies for implementation
•
What can we do now vs. wait for further guidance / final regulations?
•
Develop a high level roadmap to identify next steps, timelines, and milestones to be
followed between now and July 1st 2013?
•
Support for critical project management activities
•
Provide subject matter support and guidance for requirements and design
activities
•
Provide implementation support as needed for development of policies,
procedures, and data and system enhancements
•
Recommendations on best practice
Project Plan /
Road Map
Implementation
Support
31
Internal Controls and
Certification Considerations
32
What areas of the organization are impacted?
Departments
Business functions
• Tax
• IT
• Product design, development, and
implementation
• Legal and Executives
• Marketing, sales, and distribution
• Regulatory Compliance
• On boarding, KYC/AML, and tax
documentation
• Accounting
• Customer relations
• Operations
• Account holder communications
• Payments and deposits
• Tax withholding
• Tax reporting
• Governance
These functions may be performed by third parties and under
FATCA management has a responsibility to perform the
appropriate oversight
33
Developing a controls framework
Key questions to consider
• Have you appointed who will be the certifying officer(s) under FATCA?
• In the case of an affiliated group with multiple FFIs, how will your organization ensure
that each are in compliance as one FFI can affect all others?
• Have you developed a sub-certification process to enable disparate reporting units to
provide assurance to the certifying officer?
• Where you have you assigned individuals to certify on behalf of the affected legal
entities how have you ensured they have the appropriate insight into the related
activities?
• Have you assessed the current controls design regarding withholding and reporting
and/or re-designed controls to assist you in making your certification that you are in
compliance with FATCA?
• Have you developed a plan to test those controls whether using internal or external
resources?
• Where you have outsourced key FATCA-related functions to service providers, how are
you ensuring that they have adequate controls in place and operating effectively to
form a basis for your certification?
34
Verification of compliance
IRS Certification for Registered FFIs
• Staged certifications of existing accounts
• Ongoing annual certifications over compliance with due diligence,
withholding and reporting obligations under the FFI Agreement
• One-time certification asserting no practices exist to assist clients in evading
identification
• Flexibility in designating officials to certify
• Appropriate functional responsibilities at high enough level
• Management required to “self-test” policies and procedures put in place
• General standards to be developed by IRS in pending draft FFI Agreement
- Potential option of obtaining third-party reviews
35
Verification of compliance
Certification for FFIs
• Ability for IRS to request “additional information” (to be defined)
• Compliance subject to review by IRS or an external party
• Robust policies and procedures should support certification process
– beyond sub-certifications
Certification for deemed-compliant FFIs
• Certified deemed-compliant FFIs include local banks, certain
retirement funds, certain non-profits and FFIs with only low-value
accounts. Certification needs to be made to withholding agents only
• Registered deemed-compliant FFIs include non-reporting members
of FFI groups, Qualified Collective Investment Vehicles and restricted
funds. Certification to IRS required every three years
36
Certification structure
In order for an affiliated group to certify to the IRS that it is in compliance, the responsible officer of the lead
FFI must obtain sub-certifications across the organization. Below is a sample certification structure.
Responsible Officer
Legal Entity A
Sub-Certifying Officer
Legal Entity B
Sub-Certifying Officer
Legal Entity C
Sub-Certifying Officer
Process Level
Certification
Account Set-Up Certifying
Officer
Non US Corporate Actions
Certifying Officer
U.S Corporate Actions
Certifying Officer
37
PwC
Who is responsible for all of this?
FATCA requires certification of compliance by a “responsible officer”
• FATCA requires that a responsible officer must certify to the IRS regarding
the organization’s compliance with FATCA
• Should be involved in the development of the company's FATCA compliance
policies and procedures
• Should ensure that appropriate evaluation of the effectiveness of controls is
conducted and supports the certification
• Should leverage the internal audit and sub-certification network to perform
its responsibilities
• The provisions of FATCA are closely linked to an organization's operations
functions
• Certifying officer must be in a position within the organization to be able to
leverage resources across the organization
38
FATCA controls framework
Control framework
• FATCA requirements should be mapped to processes
• Identify or design key controls over these processes
• Operating effectiveness assessment over key controls should be performed on a
periodic basis
Risk and complexity
• FATCA is far reaching and complex
• Many different legal entities within an organization can be impacted
- One noncompliant FFI impacts the compliance of all FFI’s in an affiliated group
• Data sources and processes can differ across products / geography
• Expansion of IT applications subject to controls testing
• Outsourcing activities to third parties does not alleviate responsibilities
- Certifying officer maintains responsibility for overall certification
39
Characteristics of controls
Controls established to address the risks of non-compliance following characteristics:
• Automated or manual
• Preventive or detective
• Primary or compensating
• Designed to meet the following objectives
- Completeness
- Accuracy
- Validity
- Restricted Access
Within a controls framework, an appropriate balance of controls will be
designed based on risks for non-compliance. Controls are then routinely
assessed for effectiveness to enable management’s assertion of
compliance.
40
FATCA controls framework
Establish controls to address the key risks of non-compliance
Area
Control Objectives
Legal entity assessment
• Controls provide reasonable assurance that all legal entities are identified,
assessed and classified for FATCA impact and approved by the appropriate
personnel within the organization.
• Controls provide reasonable assurance that legal entity assessments are
communicated to all relevant parties.
• Controls provide reasonable assurance that changes in legal entity listings and
related classifications are appropriately updated in a timely manner and
approved by the appropriate personnel.
• Controls provide reasonable assurance that all FFI agreements are
appropriately executed, tracked and protected.
Client account assessment
• Controls provide reasonable assurance that required data is obtained during the
new individual account set up process. Appropriate client account due diligence
procedures are performed on all applicable accounts and appropriate
documentation is retained.
• Controls provide reasonable assurance that pre-existing accounts subject to
FATCA requirements are identified completely and accurately
• Controls provide reasonable assurance that changes to account information are
captured and assessed for impact on classifications.
• Controls provide reasonable assurance that due diligence is performed
appropriately for all accounts (new accounts, pre-existing accounts, changes in
accounts) and accounts are appropriately classified.
Withholding
• Controls provide reasonable assurance that tax withholding is performed
completely and accurately for accounts impacted by FATCA requirements
Reporting
• Controls provide reasonable assurance that reporting to the Internal Revenue
Service required by FATCA is complete and accurate and produced on a timely
basis.
41
FATCA controls framework
Area
Controls Objective
Certification Procedures
• Controls provide reasonable assurance that FATCA processes and procedures
are performed consistently across the organization to support applicable
certifications to be made to the IRS and/or withholding agents.
Technology – Change Management
• Controls provide reasonable assurance that new developments and changes
to existing systems are documented, tested, approved, and implemented by
authorized personnel.
• Controls provide reasonable assurance that access to FATCA data is
appropriately restricted to authorized personnel.
42
FATCA controls framework – example controls
Sample controls to support “due diligence”
Control points
Relative Priority Control type
(High/Low)
(CAVR)
Due diligence procedures are performed depending on the type and size of account. Policies
and procedures are in place regarding the definition of an account, the types of accounts for
which due diligence is required, and the dollar thresholds. Due diligence is performed for the
accounts that meet this pre-defined criteria. Standardized checklists are used to faciliate the
due diligence reviews.
An indicia search is conducted across relevant client data repositories and reviewed. Where
relevant indicia are identified, appropriate follow up is conducted and documented.
High
C,A
High
A
Aging is performed to indicate the status of open information requests. Accounts with US
indicia where additional information was requested (including any applicable waivers) that
are aged above a specified threshold are reviewed. Accounts over a specified threshold are
deemed recalcitrant accounts and classified as such in accordance with the FATCA criteria.
Accounts and balances are reviewed periodically to ensure that an electronic or paper search
was performed for all accounts depending on the account type.
High
C,A
High
C,A
Customers have unique identification numbers that are used to aggregate accounts across the
organization. These identification numbers are used in the creation of summary reports of
customer balances that are used to determine account classifications.
Client systems use the FX spot rate as of the last day of the calendar year to convert foreign
accounts to US dollars when classifying accounts.
High
C
High
V
43
FATCA controls framework
Below is a depiction where controls should be in place across your operational work flow. Note the points
included are at a summary level and these may vary by entity.
8
7
6
1
5
2
Clients
Client, Account
& Counterparty
Management
8
2
Legal Entity
Management
Legal Entity
Classification
Finance
FFI Certification
Example
Asset
Management
Banking/
Deposits
Front
Office
Credit
Front
Office
Reporting Portal
13, 14
Books & Records System(s)
10
Cost Basis
Margining
Payments
Chp. 3 &4 WH
P&L
Clearing &
Settlement
Corp Actions
FATCA
Computations
13,
14
4
1
Rates
Front
Office
Account activity
9
Account
Maintenance
Remediation
Equities
Front
office
5
7
13,
14
8
Results
Preexisting
Account
analysis
New Account
Process
Derivativ
es
Front
office
Account
Info
9
Account & Legal Entity Info
New Accounts
& Updates
Legal Entity Info
OPERATIONAL WORKFLOW
FATCA
Regulatory
reporting
11
FATCA
Client reporting
IRS
PPP reporting
FATCA Warehouse
3
Reference
Data
Doc Mgmt
FATCA
Rules
Results
TPA
9
Calculate PPP
General Ledger(s)
9
12
13
11
Clients
IRS Deposits
Finance, Legal, Tax
4
Payments
FATCA IRS Deposits
Client & FI deposits
Governance
Firm
Management
FATCA Governance
Key showing existing, new and modified functions/activities
= Existing operational function/activity
= New or modified function/activity due to FATCA
PwC
44
FATCA controls framework
1.
Controls provide reasonable assurance that all legal entities are identified, assessed and
classified for FATCA impact and approved by the appropriate personnel within the organization.
2.
Controls provide reasonable assurance that legal entity assessments are communicated to all
relevant parties.
3.
Controls provide reasonable assurance that changes in legal entity listings and related
classifications are appropriately updated in a timely manner and approved by the appropriate
personnel.
4.
Controls provide reasonable assurance that all FFI agreements are appropriately executed,
tracked and protected.
5.
Controls provide reasonable assurance that required data is obtained during the new individual
account set up process.
6.
Controls provide reasonable assurance that pre-existing accounts subject to FATCA
requirements are identified completely and accurately.
7.
Controls provide reasonable assurance that changes to account information are captured and
assessed for impact on classifications.
45
FATCA controls framework
8.
Controls provide reasonable assurance that due diligence is performed appropriately for all
accounts (new accounts, pre-existing accounts, changes in accounts) and accounts are
appropriately classified.
9.
Controls provide reasonable assurance that policies and procedures related to account
maintenance and classification is communicated throughout the organization and to third party
service providers.
10.
Controls provide reasonable assurance that tax withholding is performed completely and
accurately for accounts impacted by FATCA requirements.
11.
Controls provide reasonable assurance that reporting to the Internal Revenue Service required by
FATCA is complete and accurate and produced on a timely basis.
12.
Controls provide reasonable assurance that FATCA processes and procedures are performed
consistently across the organization to support applicable certifications to be made to the IRS
and/or withholding agents.
13.
Controls provide reasonable assurance that new developments and changes to existing systems
are documented, tested, approved, and implemented by authorized personnel.
14.
Controls provide reasonable assurance that access to FATCA data is appropriately restricted to
authorized personnel.
46
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does not constitute professional advice. You should not act upon the information contained in
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substitute for consultation with professional advisors.
Solicitation
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