The shift in financial and economic conditions all over the world requires stringent regulatory scrutiny. Regulators demand financial institutions to improve transparency in their reportable accounts and tax revenues.
As you are aware, after decades of discussion and dialogue finally in 2014, the Organization for Economic Co-operation and Development (OECD) introduced CRS as a global legal framework for Automatic Exchange Of Information(AEOI) between multiple jurisdictions to promote tax transparency and prevent offshore tax evasion. OECD directs the participating jurisdictions to obtain information from the Financial Institutions on the financial accounts held by the non-residents. This information will then be exchanged annually among the relevant jurisdictions. So far 115 jurisdictions around the globe have adopted CRS to maintain the integrity of the tax systems by combating offshore bank secrecy.
Every financial institution is scrambling to get over the line of HMRC CRS deadline every year around April and May. Nevertheless, on the regulatory reporting front, authorities are more stubborn on respective deadlines & Reporting accuracies, hence enterprises are shifting to digital automation at a faster pace never to be “battlefield ready” with a good flood-defence system. It’s more strategical rather than a routine regular exercise.
CRS reporting landscape constantly demands increased dynamics of changes including the following
- Reporting jurisdiction addition/drop from AEOI regime.
- Sustained demand from HMRC on correct account classification & reporting.
- Continuous impact on onboarding platforms to capture extended and precise tax declaration and ongoing maintenance and review.
- Periodical review & ongoing centralised record maintenance on Self Certification.
- Platform to support HMRC queries and submit a revised variation.
- Platform to support Remediation, Cleansing & Data Enrichment using single customer view data.
Lets start discussing the above said changes and the challenges around the CRS reporting and what banks and other financial institutions should do to be proactive with an effective plan to manage the CRS FATCA regulatory obligations seamlessly.
What are the challenges faced by the financial institutions in CRS reporting?
Data quality is one of the main challenges in any regulatory reporting as the legacy technologies or the manual operational approach results in data inaccuracies, data gaps, inconsistent taxonomies & consolidation of entities that affects the accuracy of the CRS reporting and increase the operational risk.
Further, as the new compliance processes require more granularity around the reportable data, FIs with their legacy operational approach find it hard to produce data that is fully compliant with HMRC FATCA & CRS reporting guidelines.
Achieving the regulatory compliance mandate is time-dependent and involves operational risk due to manual data scrubbing. Manual validation causes are results in error-prone and require additional investigation from the Regulator prompting questions and enquiries over the operational efficiency of the business and the data which lead to reputational risk.
What do the financial institutions need to do?
As you are aware that the deadline for HMRC CRS/FATCA reporting for 2023 is 31st of May, it is the right time for financial institutions to initiate the gap study and analysis on your CRS data and reports at the earliest so that you will be fully geared up along with effective data governance framework for this year CRS reporting on time.
Financial Institutions need to foster collaboration between various teams such as Operations, IT, Legal, and Taxation that ensures comprehensive and hassle-free compliance to robust regulations. Financial institutions should revisit their existing KYC/AML and client onboarding procedures with an exhaustive due diligence procedure to segregate and categorise the CRS reportable accounts. It requires a robust framework, domain expertise, a unified solution, etc to handle the ever-evolving CRS requirements, address the challenges and be prepared for the reporting obligation now as well as future.
Macro Global offers ”Fully-Automated, Future-Proof, Cloud/On-Prem/Hybrid” platform CRS Stride – AEOI / HMRC CRS & FATCA Reporting Solution that is unique and flexible comprising both Audit & Automation processes as a single integrated platform crafted with all our experience & expertise learnt over years.
With our futureproof “CRS Reporting Solution”, financial institutions would be better placed to furnish the precise CRS data in line with the HMRC CRS specifications.
We take care of your CRS reporting obligations in its entirety and assist you not during the deadline but prepare you before and after the submission. You have one less thing to worry about and fully confident that your compliance adherence completely addressed throughout with an assurance validation by our tax and subject matter experts. You could save substantial cost and effort by your compliance team to prepare and submit CRS report without worrying endless technical challenges around the submission, remediation & managing variation and finally “Assurance Certification”.
One great reason to choose us is the product maturity as it’s already tried and tested with every small detail addressed leaving you to focus on your business than burning midnight oil to tackle endless queries from HMRC.
If this sounds like something you are keen, pls drop a note to our sales team at salesdesk@macroglobal.co.uk or call us at +44 0204 574 2433 to book a demo or for a free no-obligation product trial.
