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Jonathan Camhi
Jonathan Camhi
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5 Insights On Industry Preparations for FATCA

A recent study shows that banks are pushing forward on FATCA compliance but are in need of clarification from regulators about some requirements.

With deadlines approaching next year regarding FATCA, many banks are still unsure about several aspects of compliance with the new law, according to a survey released last week by NICE Actimize. The survey involved individuals from more than 100 institutions across the world that participated in a FATCA webinar that NICE Actimize held earlier this year.

There survey found little agreement among the respondents as to what they saw as the biggest challenge in FATCA compliance. The most common top challenges listed by the respondents were identifying accounts that FATCA applies to (25%), meeting compliance timelines (21%) and managing multi-jurisdictional conflicts (19%). The study noted that all of these challenges will require more coordination both within and between different organizations.

Images are courtesy of NICE Actimize.

One positive finding from the research is that some of the banks involved in the survey are quickly reading up on what FATCA will require of them. Just less than half of the respondents (45%) said they had good or excellent understanding of what they’ll need to do to achieve FATCA compliance. That number may seem a little low at first, the study said. But FATCA’s rules were just finalized a couple of months ago, so it’s actually a positive sign that nearly half of the institutions feel confident in their understanding of compliance, the study concluded.

The respondents also gave differing answers with little consensus on which area of compliance they needed the most clarification on, the survey found. The most common response was reporting (22%), followed by beneficial ownership (18%) and tax withholding (16%). The study advised institutions to bring more executive and organizational focus to FATCA compliance to increase their understanding in these areas. Bringing in FATCA specialists to help with finding and implementing solutions was also suggested.

Although most of the financial institutions in the survey said they are implementing FATCA solutions, less than 5% of them said they were finished with those implementations, according to the survey. With the final FATCA deadline coming up midway through next year, many of these organizations are going to have a lot of work and preparation to do in the next few months, the study said.

Banks are taking care to dedicate resources to FATCA, the survey found. More than half of the banks surveyed (53%) said they had a dedicated project budget for FATCA compliance. Another 43% of those surveyed said they had dedicated up to 20% of their total compliance spend to FATCA.


Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

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User Rank: Author
11/2/2013 | 5:05:25 PM
re: 5 Insights On Industry Preparations for FATCA
More than half (53%) of survey respondents have a separate budget for FATCA compliance, indicating this is an important regulation for them. Given that banks are dealing with Dodd Frank in derivatives as well as Basel III, their compliance budgets are juggling multiple projects.Yet 43% of the respondents said they are spending as much as 20% of their compliance budgets on FATCA.
User Rank: Author
11/1/2013 | 7:11:29 PM
re: 5 Insights On Industry Preparations for FATCA
I guess the good news is that 80% or respondents are making progress in achieving compliance. But based on the other answers, it may be that some of them aren't sure if they are complying with the right things. The research doesn't say who at the bank typically is leading these efforts, clearly there are some issues around internal communications and education -- the problems aren't just with the regulation itself.
User Rank: Author
11/1/2013 | 7:09:09 PM
re: 5 Insights On Industry Preparations for FATCA
Since FATCA's requirements were just recently finalized a lot of banks are still trying to figure out what it will take to reach compliance. Sounds like it's going to be a scramble. The good news though from the survey is that banks are setting aside the money to pay for the expense of compliance.
User Rank: Author
11/1/2013 | 6:23:17 PM
re: 5 Insights On Industry Preparations for FATCA
I'm not surprised that meeting compliance timelines was listed as one of the top concerns. With dense, sweeping regulations such as this (and Dodd-Frank for example) there is often confusion about when certain parts of it come into effect. Hopefully, financial institutions have done their homework on FATCA implementation.
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