People, companies, regulations… things change
Ok, so detection capabilities can search for U.S. indicia – place of birth, address, standing instructions… and not find any. A case management system can store a classification that an entity account is, for example, a passive non-financial foreign entity
(NFFE) without U.S. controlling persons. But life goes on, and things change. People move to the U.S. or even get a green card. Entities change location, structure or ownership (and owners can move as well). A client’s balance across their accounts starts
becoming relevant. The client sets up standing instructions to make regular payments to an account held in the U.S. FATCA is not a one-time exercise, so you need a solution to do ongoing monitoring for what FATCA considers changes in circumstances. If you’ve
read my previous posts on using AML technology for FATCA, by now you can guess the analogy: customer due diligence (CDD), whether at account opening or to remedy old accounts, is not the end of the story in AML – and that’s why monitoring systems for customers
and their behavior exist.
Those monitoring systems have also had to adapt to regulations (and crime risks) that keep evolving. And, if deployed in different countries at different types of institutions, the systems have had to deal with different perspectives on who is foreign, what
constitutes a lot of money, and how regulations translate into processes for the institution and its compliance team. Just like every IGA to implement FATCA for a given country may be a little bit different to adapt to local laws and industry characteristics.
The key word here is flexibility. FATCA is likely to evolve over time, and a global move to crack down on tax evasion is likely to lead to more regulations about finding taxpayers from other countries as well. The first signs of this have already appeared
from the G20 and the large European countries. You don’t want to buy or build a one-trick pony that only does what the IRS asks for today. What’s required is versatile platform, that can be continually fed with data to effectively fight against the ever-evolving
landscape of tax evasion and other financial crimes now and into the future.