oecd common reporting standard – getting into … · oecd common reporting standard – getting...

OECD Common Reporting Standard – Getting into the DetailSTEP / GAT

Jo HuxtableMartin Popplewell

11 February 2016

• Introduction – CRS and the wider regulatory environment

• CRS – latest developments and issues in practice

• FATCA / CRS – operational considerations

• Questions and Next steps

Agenda

2© 2015 Deloitte LLP. All rights reserved.

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Introduction – Common Reporting Standard and the Wider Regulatory Environment

© 2015 Deloitte LLP. All rights reserved.

The Regulatory LandscapeOver 90 jurisdictions have committed to CRS

E U

R O

P E

, M

I D

D L

E

E A

S T

AN

D A

F R

I C

A

A M

E R

I C

A S

A S

I A

P

A C

I F

I C Australia

Brunei Darussalam

China

Hong Kong

India

Indonesia

Japan

South Korea*

Macau

Malaysia

Marshall Islands

New Zealand

Niue

Samoa

Singapore

Anguilla*

Antigua and Barbuda

Argentina*

Aruba

Bahamas

Barbados

Belize

Bermuda*

Brazil

British Virgin Islands*

Canada

Cayman Islands*

Chile

Colombia*

Costa Rica

Curaçao*

Dominica

Grenada

Mexico*

Montserrat*

Saint Kitts and Nevis

Saint Lucia

Saint Vincent and the Grenadines

Saint Martin

Trinidad and Tobago

Turks and Caicos Islands*

Uruguay

Albania

Andorra

Austria

Belgium*

Bulgaria

Croatia*

Cyprus*

Czech Republic*

Denmark*

Estonia*

Faroe Islands*

Finland*

France*

Germany*

Ghana

Gibraltar*

Greece*

Greenland

Guernsey*

Hungary*

Iceland*

Ireland*

Isle of Man*

Israel

Italy*

Jersey*

Latvia*

Liechtenstein*

Lithuania*

Luxembourg*

Malta*

Mauritius*

Monaco

Netherlands*

Norway*

Poland*

Portugal*

Qatar

Romania*

Russia

San Marino*

Saudi Arabia

Seychelles

Slovak Republic*

Slovenia*

South Africa*

Spain *

Sweden*

Switzerland

Turkey

United Kingdom*

United Arab Emirates

*Signatories of multilateral CAA signed in Berlin; source: http://www.oecd.org/tax/exchange-of-tax-information/MCAA-Signatories.pdf

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The Regulatory TimelineCRS is being implemented on a very short timeframe and is replacing UK FATCA

5

CRS

US FATCA

Go live: 01/07/14

UK FATCA

2014 2015 2016 2017

June Annual Reporting

Taken over by CRS on 01/01/16

Go live: 01/01/16


The wider regulatory and risk environment

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Tax

Information exchange

Regulation

Risk and enforcement

CRS – Latest Developments and Issues in Practice

FATCA vs CRS – Source Materials

US FATCA CRS

Agreement type Bilateral Multilateral (mainly)

Length of agreement

IGA – 47 pages CRS, commentary and appendices to the “purple book” – 307 pages

Supplementaryguidance?

US Regulations and IRS FAQs – but not directly binding on a IGA model 1

OECD implementation handbook – 118 pages

Review of local guidance etc by other party?

No formal arrangement Yes – OECD peer review

Local Guernsey guidance notes

Yes – 194 pages Yes – 24 pages (for now)

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CRS in the Crown Dependencies

• For FATCA we saw largely common guidance notes produced across the Crown Dependencies.

• For CRS, the islands are producing separate guidance.

• Both Jersey and Guernsey released their CRS guidance notes in December 2015 (IOM CRS guidance expected shortly).

• There is a difference at a policy level between the guidance. Jersey are adopting an approach such that the existing FATCA guidance can continue to be applied for CRS (provided it does not frustrate the purpose of the agreement).

• The Guernsey approach is to broadly follow the extensive OECD materials rather than the existing local FATCA guidance.

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Example of US/UK FATCA vs CRS – Trust Structure

XYZ Trust

Investment - Property

Asset Hold Co

Trust Company

Beneficiary Settlor

“Manages”

Key features of CRS analysis :-

• Financial asset test not optional?

• No “look through”• No formal sponsored

entity regime• TDT equivalent under

CRS• Requirement to “look

through” all entity account holders of the trusts?

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CRS – Immediate RequirementsCustomer onboarding

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Illustration of CRS differences in practice

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XYZ Trust

Investment - Shares

Asset Hold Co

Trust Company

Beneficiary A, B and C

“Manages”

Corporate SettlorCorporate

beneficiary DCorporate

beneficiary E

Illustration of FATCA vs CRS differences in practiceAccount holder Issue to highlight Self-cert

receivedFATCA analysis

CRS analysis

Corporate Settlor Look through of corporate accountholders of trusts under CRS?

Yes – Active NFFE (say UK resident)

Reportable UK FATCA

“Look through” of entityaccount holders of a trust – identify controlling persons (?)

Beneficiary A (new individual account)

Timing of CRS implementation

Yes – say New Zealand resident

Not reportable Reportable – but not until 2018

Beneficiary B (pre-existing individual account)

Residential address test

No Indicia reviews Optional residentialaddress test

Beneficiary C (new individual account)

CRS undocumented accounts

No Reportable for both US and UK FATCA

Undocumented account

Beneficiary D (entity) Specified person definition

Yes – UK FI Reportable (unless a depository FI)

Not reportable (although“look through” required as entity account holder of trust?)

Beneficiary E (entity) PMIE in NPJ Yes (?) – USFI

Reportable US FATCA

Look through of PMIE in NPJ

FATCA / CRS – Operational Considerations

Transition of FATCA to Business as Usual

Benchmarking

Document the current compliance approach at a high level and align with peers

1

Controls validation

Identify existing controls, integrate components and document intended function

Controls testing and BAU

Test the robustness of controls and ensure function is as expected

2 3

Implementing a standardised approach to assessing the governance of FATCA/CRS programmes

Moving to BAU

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FATCA Operating ModelCentralised Project vs Business as Usual

FATCA Programme

Manager

Relationship Managers

IT

ComplianceBoard of directors

Client queries

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FATCA Operating ModelCentralised Project vs Business as Usual

FATCA Policies and Procedures

Divisional Champions

Divisional staff


Divisional staff


Divisional staff

FATCA Programme Board

FATCA Programme

Manager

Training, governance and assurance

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Example FATCA / CRS ProcessExample Reasonableness tests

Initial Reasonableness test (on receipt of self-certification)

Ongoing change in circumstances requirement

1. Initial checklist on receipt of self-certification for completeness.

2. Formal guidance / training for relationship managers to undertake reasonableness check.

3. Cross check to wider information held.4. Remediation process in place where test

is failed and follow up required.5. “Reasonable” Forms passed to central

FATCA team / Directors for approval.6. Final forms processed on system.7. Defined list of staff permitted to allocate a

FATCA classification8. Evidence on file of the above process

(and policies documented).

1. Certain “trigger events” (e.g. change of address etc) defined in procedure documents and automatically require FATCA sign off by approved persons.

2. Training / guidance for staff on these “trigger events”.

3. FATCA / CRS part of annual file review.4. Staff give separate independent sign off

that met FATCA / CRS obligations – link to performance management.

5. Implement remediation policy including details on “curing documentation” (e.g. loss of nationality certificates)

6. Where classification has changed, defined list of staff with permission to allocate a FATCA classification. Link to reporting workflows.

7. Evidence on file of the above (and policies documented).

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Example FATCA ProcessDocumentation

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The path AheadThere are a number of key activities for all FIs in the next 6 months…

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• Conclude on FATCA reporting strategy for 2016.

• Conclude pre-existing FATCA reviews (if not already done).

• Undertake CRS GAP analysis (if not already done).

• Ensure FATCA programme is clearly documented with procedures and controls in place.


Contact

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Martin PopplewellDirector01481 [email protected]

Jo HuxtablePartner 01481 703 [email protected]

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

Deloitte LLP is the United Kingdom member firm of DTTL.

This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.


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