Guernsey FATCA & CRS: Onsite Visits & Independent Inspectors
On September 13, 2021, the Guernsey Revenue Service (GRS) posted FATCA and CRS legislative and regulatory changes stemming from the July 15, 2021 approval of the Income Tax (Guernsey) (Amendment) Ordinance, 2021, (the Ordinance).
The Ordinance provides the legal basis for GRS to undertake onsite visits to review a financial institution’s (FI’s) FATCA and/or CRS compliance. If GRS does not obtain consent from the FI or provide at least seven days written notice to the FI, GRS must obtain approval from the Bailiff for an onsite inspection.
The GRS has already been conducting CRS & FATCA compliance activities (including site visits) for almost a year with site visits being conducted with the consent of the FI. Because the GRS wants to provide FIs sufficient time to prepare and provide information and documents (including answering a questionnaire) prior to a site visit, the GRS will usually provide more than seven days’ notice of its intended site visit.
Expanded FI Registration
Any entity that is classified as an FI under FATCA or CRS will be required to register on the Information Gateway Online Reporter (IGOR) system. Previously, an FI was only required to register in IGOR if it had a reporting obligation.
The anticipated deadline for IGOR registration is February 28, 2022. However, the GRS is currently updating IGOR to enable registration for non-reporting FIs. Accordingly, it will be important to monitor when the capability is finalized and if the deadline changes. The GRS expects to provide further information to the public at the beginning of December 2021.
Where a reasonable suspicion exists the FI has violated FATCA or CRS, the GRS Director is empowered to appoint or require an FI to appoint independent inspectors to investigate the FI. The independent inspector would oversee the remediation of significant failings and be required to:
Make a full disclosure to the GRS detailing the full extent of the failings and the measures introduced to correct the failings; and
Based on the revised policies and procedures, give assurance to the GRS future reporting will be accurate and complete.
The GRS anticipates this power will be used in limited circumstances.
Starting in January 2022, FIs are required to notify the GRS if they:
Have been unable to obtain a valid CRS and/or FATCA self-certification; or
Have reasonable grounds to suspect a self-certification received is or has subsequently become incorrect or unreliable.
Upon being notified, the GRS may request the FI to provide further information and may also order the account be frozen. The GRS categorized its power to order an FI to freeze financial accounts as being a means to support the FI when the FI is unable to obtain a correct, reliable self-certification.
The GRS will provide additional information regarding the notification process in the beginning of December 2021.
New penalty regulations came into effect on April 29, 2021. Failure to submit either CRS or FATCA reports by the annual reporting deadline of June 30 could result in the following penalties:
Initial penalty of £300
Daily penalties of £50
Up to £1,000 per day where there has been 30 days of continual failure.
In the event an FI submits an annual report which the GRS finds to be incorrect or incomplete due to negligence or fraud, the following penalties may result:
Negligence: the penalty will be based on 0.5% of the balance or value of each affected financial account (and where no account balance or value is required to be reported a penalty of up to £1,000 per financial account).
Fraud: the penalty will be based on 1% of the balance or value of each affected financial account (and where no account balance or value is required to be reported a penalty of up to £5,000 per financial account).
Right of Appeal
An FI has the right of appeal against a decision by the GRS Director to give a direction, appoint an inspector, impose a requirement to provide further information or documents, or make a freezing order.