New ‘industry’ being driven by international regulatory reporting
INTERNATIONAL tax disclosure and transparency rules could help create a new ‘industry’ in outsourced regulatory reporting, says Jersey-headquartered SANNE.
The global fiduciary and administration provider has seen growing demand for its regulatory reporting services as governmental and tax reporting authorities implement the global Common Reporting Standard (CRS) and the US Foreign Account Tax Compliance Act (FATCA), which require a range of clients to disclose information or face fines.
Under CRS, participating jurisdictions are required to obtain information from their financial institutions and automatically exchange that information with other participating jurisdictions on an annual basis. The first reporting by financial institutions is due from March 2017 onwards by early adopters.
FATCA requires foreign financial institutions to report to the US Internal Revenue Service any information in respect of foreign assets held by American taxpayers or by foreign entities substantially owned by US taxpayers.
SANNE Managing Director Steve Sokić, who heads the company’s Corporate and Private Client group globally, said that CRS and FATCA were key points of discussion at an international forum that he recently attended in Mexico.
‘The need for, and in many cases, the lack of expertise when it comes to CRS reporting was one of the issues raised during the panel discussion that I participated in during the Legal Week Private Client Forum Americas 2017,’ said Mr Sokić.
‘As a global financial services leader, SANNE can and is meeting demands for such reporting services. While some ultra-high net worth individuals may question the impact of CRS and FATCA, it's really important to understand the need to be compliant with such regulatory measures.
He added: ‘However, many financial services providers including many of our corporate clients - who themselves undertake CRS and FATCA reporting for their clients - have expressed concern about such additional burden on their resources. In a number of cases, they have started to outsource such reporting to firms like ours and others that have emerged (e.g. the big four accounting firms).’
‘Should CRS continue in its current form, we could see the emergence of a new industry around outsourced regulatory reporting as demand for such expertise can only grow in this increasingly regulated global environment.’
Lisa Aune, director in SANNE’s corporate and Institutional division, said: ‘We’ve built up and have further plans to expand our tax and regulatory reporting services in order to help our clients understand their obligations in readiness for the new regime.
‘In addition to FATCA and CRS, there are other new regulatory filing requirements emerging off the back of the OECD's Base Erosion and Profit Shifting (BEPs) framework. Individuals and numerous public and private corporate and other entities need to be ready and SANNE is here to help ensure compliance.’
The forum also discussed recent CRS developments in Latin America and Europe, including Mr Sokić’s insight into developments in the UK regarding recently issued HMRC guidelines in response to human rights concerns about information going to unstable jurisdictions. While the HMRC guidance is limited to foreign/non-UK donors to UK charities, there was a discussion about the possibility of such rationale being extended to other individuals with similar privacy and human rights concerns.
The event brought together top private client legal experts from 15 jurisdictions including from the USA, Latin America and Europe who advise high net worth and ultra-high net worth individuals. It was held at the Banyan Tree Mayakoba, Playa del Carmen, Mexico between 15 and 17 February 2017.