fatca crs health check

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FATCA and CRS health check

The legislative context

Tax authorities across Europe are increasingly requiring enhanced FATCA and CRS compliance from financial institutions and are stepping up their FATCA and CRS audits.

In October 2019, many financial institutions received a formal request from the Luxembourg Tax Authorities (LTA) to provide FATCA and CRS information and documentation, including a description of the measures in place to ensure due diligence and reporting obligations.

On 18 June 2020, the Luxembourg legislator took a step further by voting in a FATCA and CRS law (the “Law”) amending both the CRS law of 18 December 2015 and the FATCA law of 24 July 2015. The Law explicitly requires Luxembourg reporting financial institutions to keep records of any action taken and supporting evidence used to fulfill their due diligence and reporting obligations for 10 years.

The Law also extends the LTA’s investigation powers. Upon request, it enables them to access records of any action taken, supporting evidence, policies, controls, procedures, and IT systems for up to 10 years after the end of the calendar year in which the Luxembourg reporting financial institution is required to communicate this information.

How to be compliant

Considering these developments and the potential penalties for non-compliance, Luxembourg reporting financial institutions are advised to review and potentially update their processes and procedures to meet the new requirements of the OECD, local regulators and local tax authorities.

In this respect, an efficient operating framework is essential to demonstrate compliance with FATCA and CRS in a reliable and provable way:

organizational structure

An organizational structure with defined roles and responsibilities

tailored training program

A tailored training program to ensure relevant staff members have the adequate skills and knowledge to perform their duties

documented processes

Well-defined and documented processes and procedures

control framework

A strong control framework

robust IT systems

Robust record-keeping and IT systems

How Deloitte can help

To help Luxembourg reporting financial institutions comply with these regulations, Deloitte offers a FATCA and CRS health check to assess compliance and identify potential gaps by:

Reviewing the FATCA and CRS policies and procedures covering, inter alia, client on-boarding, classification, due diligence, change in circumstances, and reporting

Reviewing the governance and controls in place

Assessing data quality

Reviewing a sample of accounts under a risk-based approach (testing of documentation and information on IT systems)

Reviewing reporting quality

Deloitte then summarizes the findings and suggests remediation measures in a written report, which can be part of an audit defense documentation.

This healthcheck may also allow you to potentially identify non-reportable clients that are incorrectly documented for CRS and for which DAC 6 reporting may be requested under hallmark D.
Our methodology is flexible and can be tailored to your needs. We can use a risk-based approach or base it on your internal audit program, or we can perform a fully-fledged review or focus only on the areas you consider at risk.

Deloitte can also support Luxembourg reporting financial institutions by

Drafting FATCA and CRS policy/procedures.

Providing tailor-made FATCA and CRS training and access to our FATCA and CRS eLearning curriculum.

Find out more >>

Answering FATCA and CRS technical questions, analyzing specific cases, and providing latest updates through a regulatory hotline.

Offering FATCA and CRS reporting solutions through Deloitte Solutions, our regulated entity with a PSF status.

Find out more >>

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Contacts

Eric Centi

Eric Centi

Partner | Financial Services Tax

Eric is an expert in Operational Taxes where he assists financial institutions on topics such as: Aberdeen Tax Reclaims: Filing of withholding tax reclaims on behalf of investment funds on the basis o... More

Julien Lamotte

Julien Lamotte

Partner | Tax - GFSI

Julien Lamotte has a sound experience in corporate tax advice for Financial Services players (e.g. banks, Fintech, asset managers, insurance/reinsurance) and for the structuring of PE/RE investments t... More

Alexandre Havard

Alexandre Havard

Director | Consulting–Banking, Insurance & Non-FSI

Alexandre joined Deloitte Luxembourg in 2015 after 5 years as a Project Manager for an international banking group in Paris. He is now acting as a Director in our Consulting department, working mostly... More

Nenad Ilic

Nenad Ilic

Director | Tax - GFSI

Nenad is a director in the CBT-GFSI department, where he assists banks and asset managers on a broad range of local and international tax matters such as corporate taxation, transactional tax planning... More

Anthony Tremblier

Anthony Tremblier

Director | Tax - GFSI

Anthony is a Director with Deloitte Luxembourg Financial Services (FSI) tax practice and has more than 12 years of professional experience. He is specialized in Operational Taxes and as such has parti... More