Be ready for FATCA and any other compliance mandates
FATCA is a regulation to prevent tax evasion through the use of foreign accounts. It applies to all financial institutions operating outside the U.S. If you are a Foreign Financial Institution (FFI), you will be asked to safeguard the correct taxation of U.S. citizens, identify their accounts and report them to the U.S. tax authority (IRS). In the case of client non-compliance, you will be required to apply a thirty percent tax on all U.S. payments -- withheld at the source of payment.
FATCA affects banks, insurance companies, investment and mutual funds organizations as well as asset management firms. Unfortunately, complying with FATCA will be a challenge due to the following realities:
Complying with FATCA could require considerable adaptation of your processes and systems, including those related to client identification and documentation, reporting, and customer relationship management.
Preparing for FATCA
From July 1, 2013 onwards, FATCA requirements will need to be implemented step by step within the process and IT systems of your financial institution, so you need to act now if you haven’t already.
Because FATCA requirements are affecting the whole value chain, not just the areas of tax withholding or reporting, an iterative approach is needed to manage the impact of these requirements -- an approach that involves data management, rules, processes and integration.
How IBM can help you prepare for and manage FATCA
IBM can help to you analyze FATCA requirements, design and build your FATCA implementation, and integrate it into your IT landscape, with proven services and methodology. You will be able to quickly start the business analysis needed to define the right work streams, start the project and move to implementation and reporting.
By getting a fast start with the implementation of a first prototype for client screening, you will be able to smoothly do an impact analysis of processes and products, shareholding structure, value chain and partners, as well as IT architecture and interfaces. The business rules capabilities within IBM Operational Decision Management (ODM) will be used to categorize clients and automate decisions while IBM Business Process Manager will ensure efficient FATCA processes.
The value of a rule-based technology solution for FATCA and beyond
Business rule management is a critical enabling technology for managing FATCA, or any compliance use case, because it can efficiently screen all of the attributes related to clients, accounts and transactions, and generate automatic reports. Plus, and this is a big plus, it allows you to make policy and decision changes quickly and safely, with transparency and unquestionable auditability. This is important because FATCA requirements will change.
Once the final FATCA specification is released, you can expect additional changes. For the least amount of pain, you should start building robust but flexible applications that can adapt to change rapidly, at the lowest possible cost. Rule-based decision management provides the power and flexibility to manage the volume and velocity of change required by this regulatory event.
In addition, with Business Rule Management and Business Process Management, you can turn FATCA into a business opportunity: