The Foreign Account Tax Compliance Act (FATCA) is a reporting (data exchange) specification set forth by the Internal Revenue Service (IRS) of the United States of America (USA).
FATCA requires specific customer and account related information (including balances) to be provided to the IRS either directly or through the Finance Ministry of a third country. This data exchange is required to follow strict data specifications and must adhere to a common XML Schema (XSD).
The Common Reporting Standard (CRS) has been developed by the Organization for Economic Co-operation and Development (OECD) to facilitate the automatic exchange of data amongst participating jurisdictions.
Data is exchanged for CRS through government bodies of participating jurisdictions using very similar data specifications like FATCA, also provided through an XML Schema (XSD).
Within the Header of the XML file to be reported there will be identifying information related to the reporting institution and also regarding the transmitting and receiving jurisdictions.
The actual Customer / Account data to be provided is very granular and provides customer information like the Tax Identification Number (TIN) as well as the Address and Account information including but not limited to the balances and the payments received.
The information to be reported is expected to use strict and proper referencing. Future communications and data exchanges will use this data referencing. It is therefore clear that these are not "reporting projects" but messaging.
Probably the most important and difficult part of the project to be undertaken by Reporting Institutions is the required Due Diligence which is an elaborate, detailed and time consuming process for each and every Customer / Account. Although the Due Diligence requirements for FATCA and CRS are largely similar there are subtle differences related to the expected Due Diligence to be performed. There are also differences in the treatment of Pre-Exising and New Accounts.
Furthemore, Due Diligence becomes even more significant in that it is not a "once-off" task but rather a process that will have to be established and followed for Existing and New Customers / Accounts on a continuous basis.
Our solution has been designed with a specific data model in mind. Once this data model is completed (populated) the FATCA and the various CRS reports (one per jurisdiction) can be generated.
Input to our solution may be provided either with a complete integration with the primary (input) data sources of the institution or through the completion and upload of a specific data template we have prepared for this project.
Our reporting solution will automatically:
- Select the required data to be used for each Report;
- Check for Data Completeness and report on missing or ill-formatted values;
- Augment the data with required codes as specified by the relevant XSD schemas including doc referencing codes;
- Perform TIN validation as per the specific country TIN format specifications where these are provided by OECD;
- Generate the specific XML instance files for FATCA & CRS;
- Perform XML Schema Validation on the generated files and report on any errors / warnings;
- Allow for viewing / exporting / reporting of data to be reported for review before the final submission;
- Allow for the finalization of the submitted returns so as to be available for future data enquiries and messaging requirements;
- Provide complete audit logs of all actions taken within the application to facilitate transparency and auditability.