Guernsey Expounds on FATCA/CRS Enforcement Measures
On December 17, 2021, Guernsey Revenue Service issued a bulletin discussing compliance measures it may take against a Financial Institution (FI) with potential significant failings in meeting its FATCA and/or CRS obligations.
Relevant Review Factors
Guernsey provided the below list of nine factors it will take into consideration in determining if it will implement compliance measures against an FI:
“whether the non-compliance issue is of a significant seriousness and risk to the completeness and/or accuracy of the information being reported (including whether the issue appears to be isolated or systemic);
the length of time the Account Holder(s) of the affected account(s) has been non-compliant;
the time required to remedy the identified deficiencies (for example, obtaining valid self- certification of the affected financial accounts);
the volumes, size, scale, capacity to remediate;
whether there have been other compliance deficiencies;
whether corrections are required to previous reporting years;
the number of reporting jurisdiction(s) affected;
whether the issue was discovered and reported by the Financial Institution; and
whether the non-compliance issue impacts, or has the potential to impact, the effective compliance by Guernsey against the requirements of the standard assessed by international authorities e.g. OECD, MoneyVal, etc.”
While these nine factors are important, Guernsey may also take additional factors into account in deciding its course of action against a non-compliant FI.
If Guernsey decides to “give directions” to the FI, it will do so in a written notice to the FI. The written notice will explain what Guernsey expects the FI to do and, when applicable, the timeline for completing the actions.
In certain significant non-compliance situations, Guernsey will require the FI to hire an independent external compliance professional to:
Assess the scope of non-compliance.
Remediate the significant failings.
Report to the Guernsey Revenue Service details about the failings and correction measures.
Provide assurances to Guernsey Revenue Service regarding steps taken to correct existing non-compliance and to avoid future non-compliance.
Self-Reporting Failed Self-Certs
If an FI has not been able to validate a self-certification for a New Account within 90-days of the account being opened, the FI must report the account to the Guernsey Revenue Service “immediately”. This means the FI must report the lack of validated self-certification on day 91 after account opening except if day 91 falls in January of any year. In this situation, the lack of validated self-certification must be reported by January 31 of that year.
Given the number of years that have passed since Guernsey implemented FATCA and CRS, FIs should have validated self-certifications for Pre-Existing Accounts. However, Guernsey provides examples of situations (including Change in Circumstance) that may result in a Pre-Existing Account not having a validated self-certification. The deadline for an FI to self-report the lack of validated self-certification on a Pre-Existing Account are:
If the trigger event leading to a missing or failed self-certification occurred prior to January 1, 2022 and the self-certification remains unresolved the FI must submit a report to the Guernsey Revenue Service on or before March 31, 2022; and
If the trigger event leading to a missing or failed self-certification occurred on or after January 1, 2022 and the self-certification remains unresolved at the later of the end of the calendar year or 90-days from the date of discovery, then the FI must submit a report to the Guernsey Revenue Service:
on or before January 31 in the following year, OR
on or before the 91st day of discovery, whichever is the later.
The self-reporting must be done through the IGOR portal.
Guernsey will not automatically issue an order to the FI to freeze a customer account because the FI reports a missing/failed self-certification. However, this enforcement action is available to the Guernsey Revenue Service.