AEOI compliance presents enormous challenges for financial institutions. First, there are the basic differences between FATCA, which targets only US taxpayers investing abroad, and CRS, which targets taxpayers from all participating countries investing in any other participating country. Interpreting the reporting requirements adds still more complexity, as they vary widely among different jurisdictions—such as the requirements for what is reportable or non-reportable. So do the definitions of accounts and individuals which must be reported. Moreover, as with all types of financial regulation, simply keeping up with changes and updates is an onerous task in itself. In such a tangled regulatory web, the risk of critical details falling through the cracks is acute.
It’s clear that the complexities of AEOI compliance can be overwhelming. Keeping track of the documentation requirements, identifying which accounts are reportable, using the correct reporting formats and submission processes, and meeting deadlines—these activities require an enormous commitment of time, effort and resources. Responsible officers frequently have multiple responsibilities in addition to AEOI, and in-house compliance teams are stretched thin. Even the most well-intentioned institutions can make mistakes, and face serious costs and consequences for non-compliance. By all accounts, the regulations are only going to get more complex and enforcement more stringent.
Understandably, many financial institutions with significant foreign investor exposure elect to outsource some or all of their AEOI-related responsibilities. An outsourcing provider should be able to demonstrate that it has invested in dedicated systems and specialized expertise to meet AEOI requirements efficiently, thoroughly and in a timely manner. The provider should also be up-to-date and prepared to adapt quickly to changes in the FATCA and CRS regimes. Finally, the provider should have an extensive track record of meeting AEOI requirements successfully on behalf of financial institutions in various domiciles and jurisdictions around the globe. As with many regulatory regimes, the goals of FATCA and CRS are laudable, but the means required to meet them can be onerous and burdensome. A qualified, experienced and well-resourced AEOI specialist can help alleviate much of the burden, control the costs and reduce the risks of AEOI compliance.
SS&C provides FATCA and CRS due diligence and reporting services for financial institutions and investment funds around the world. Using our cloud-based AEOI compliance portal, our specialized team of experts review, validate and digitize tax documentation, and assign FATCA and CRS classifications to account holders. Once accounts are classified, we provide a summary of reportable accounts and prepare returns for filing.
Outsourcing AEOI compliance work to SS&C helps alleviate much of the burden on responsible officers and internal compliance teams, while increasing overall efficiency and transparency into this complex process, and reducing the institution’s risk of sanctions for non-compliance.
Download our "How to Reduce Risk in AEOI Compliance: Untangling the Complexity of Reporting Requirements" whitepaper to learn about the basic tenets of AEOI compliance and some of the nuances that make it difficult to streamline and standardize the reporting process. It further clarifies why many institutions turn to specialized outside expertise and resources in order to simplify compliance and avoid the risk of sanctions for non-compliance.
Written by Nadia Maharaj
Associate Director, Regulatory & Analytics