FATCA Compliance

With less than a year to go until first stage compliance, the clock is ticking. The tasks are piling up and the time is running out.

Immediate Next Steps

Financial institutions may believe at high level that preparations are fully in hand. But is real operational progress on the ground always as well advanced as internal reports might suggest?

The fact is that it’s just not safe to assume all is well with your FATCA compliance preparations. Be ready to challenge complacency and de-risk assumptions with this high level checklist:

:- Challenge Complacency: There is just not enough time for a ‘relaxed’ approach to compliance. The expectations are set. The milestones are defined. Do not accept at face value any assurances that ‘everything is in hand’ or that all will ‘be OK’. Ask to see concrete proof!

:- Challenge Culture: Often inadvertently, institutions put in place a culture that results in dangerous lack of awareness of operational realities. Managers are reluctant to push back against Board level expectations, for fear of being seen as under-performing or avoiding challenges. Leaders rely overly on reports and updates that tell them what they want to hear – as opposed to what really needs to be said.

:- Embrace Objectivity: It is crucial to remain aware of what peers and competitors are achieving in terms of FATCA compliance. Externally derived standards and benchmarks are some of the most effective drivers of internal performance. Reputable external practitioners will provide a reliable source of current industry benchmarks.

:- Involve Skilled External Counsel: There are times when it is easier and more acceptable to hear an honest assessment from an independent third party. In addition, such a source will often prove more effective at implementing change – especially when the change needs to be radical to correct slow progress and ensure future improvements. Make sure that internal advisors thoroughly understand the complex background issues and that they have real operational experience and project management skills.

:- Create Clarity: There needs to be a clear line of sight both to the realities of the current situation and to the practical actions needed to improve it.

:- Break Down Structural Barriers: Complex internal structures can lead to unintended consequences. Legacy operations look to the centre for policy and guidance that may appear late or not at all. The centre waits for action from the relevant subsidiaries – who are often unaware of what is expected, or unable to deliver without specific support. The result is often frustration, non-compliance and an unproductive ‘blame culture’.

:- Maintain Momentum: Leaders must continue to remain involved in the compliance journey. They must lend support to managers who identify issues – including unpalatable ones. They must make it clear that they want the facts not the fiction.

Above all don’t assume that high level issue awareness leads automatically to operational readiness!

How is your journey to FATCA compliance? Do you believe the industry is as ready as it should be at this stage? Join in the discussion.