Given that FATCA and CRS have been in place for several years, Financial Institutions (FIs) should be prepared for examinations and penalties. The information sheet just released by Guernsey’s Revenue Service is a further indication of this point. The document discusses several topics including Guernsey’s review process, compliance pointers, governance, and training.
Guernsey Revenue Service Review
Guernsey expects FIs to have embedded robust controls and procedures to achieve successful reporting of accurate FATCA/CRS information. Such controls must include compliance and management oversight to confirm the accuracy and completeness of the reported data.
The Revenue Service’s FATCA/CRS team has implemented compliance reviews that range from a desk top analysis of data received from an FI to in-person FI site visits. Unfortunately, the Guernsey team has identified issues, some of which can be prevented by following the team’s compliance tips.
Guernsey Compliance Tips
Self-Certification
Obtain self-certifications in accordance with the requirements for all new accounts.
Validate the self-certification.
Continue to review pre-existing accounts.
Tax Identification Numbers (TINs)
Obtain a TIN during on-boarding.
Check TIN is consistent with the relevant jurisdiction’s TIN structure.
Review accounts without a TIN or where the customer claims not to have a TIN.
Use the new IRS TIN codes for FATCA reporting if the TIN is not known.
Data Accuracy
“Some financial institutions have only completed mandatory fields or entered N/A, or similar, even though additional information is held and legally required.
Country codes, dates of birth and financial account addresses should be complete and accurate.
Reportable data must not include dummy or ambiguous data used to complete an entry in a mandatory data field.
Beneficial owners and controlling person details must be full and complete.”
Other Areas of Attention
Review accounts to identify whether they are correctly classified.
Report joint accounts as individual accounts with the entire balance or value of the joint account, as well as the entire amounts paid or credited to the joint account.
Treat partnerships as entities for reporting purposes.
Include high-risk citizenship by investment (CBI) and residency by investment (RBI) schemes in due diligence procedures.
Use the term “undocumented” correctly and periodically review undocumented accounts.
Manage system changes/upgrades to carry forward data in an accessible/retrievable manner.
Include Protectors in Controlling Person reporting.
Include FATCA/CRS review in any merger & acquisition due diligence to ensure all previous reporting was complete and accurate.
Governance Responsibility
Based on Guernsey’s compliance information, it is clear the board (or equivalent) cannot point the finger at the compliance officer. It is the board’s responsibility to ensure the FI provides complete and accurate data and there are FATCA / CRS procedures in place accurately detailing the FI’s obligations.
Guernsey expects FIs to review whether there are appropriate compliance assurance reviews and/or audits undertaken to ensure completeness and accuracy. Such reviews should include ensuring product and promotional material which includes information about CRS and FATCA is current and accurate.
Training
FIs must ensure training is current, regularly reviewed and provided to all employees involved in FATCA and CRS processes. This group of employees includes account onboarding personnel and relationship managers.
2021 Deadline
The deadline for Y2020 FATCA and CRS data to be reported to Guernsey is June 30, 2021. Late returns may face a penalty.
Click to read the complete States of Guernsey Revenue Service compliance information notice.
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