While financial institutions (FIs) have final responsibility for compliance with the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (CRS), many engage outside service providers. Advice on establishing agreements with the providers and on how to thoroughly vet the organizations are provided in a new report.
Issues that should be considered are addressed in the “Guide on Promoting and Assessing Compliance by Financial Institutions” (the Guide) published by the Organization for Economic Co-operation and Development’s (OECD) Forum on Tax Administration.
The Guide notes that FATCA and CRS it is crucial that FIs have a full understanding of FATCA and CRS Governance and Implementation when working with external service providers.
Before engaging an external service provider, FIs also must have a risk management framework with timely processes to:
In addition, the understanding and working relationship should be documented in a contract and should include a governance structure that details: