Simplifying FATCA

Abstract

The reader may already be feeling that FATCA is extremely complex, but that is because the totality of the regulation must address all possible foreseeable circumstances. The reality is that most scenarios will be simpler by at least an order of magnitude simply based on a single jurisdiction’s position. However, there are further practical steps that financial firms can take to simplify the impact of FATCA and thus reduce both cost and risk. This chapter looks at these possibilities firstly as structural simplifications provided by the regulator and secondly as contextual possibilities provided by the structure of the regulations themselves and some of the benefits granted to those firms that participate positively to meet the US’ requirements. The authors also highlight some of the risk reductions available through automation and standardisation that the IRS has provided, particularly through the use of the xml standard and online portals for the delivery of data in the International Data Exchange System (IDES) and the International Compliance Management Model (ICMM). Financial firms can themselves take risk reduction steps such as TIN Matching that is also described in this chapter.