Financial institutions worldwide are grappling with the complexities of the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS). These regulatory frameworks aim to combat tax evasion by increasing transparency, yet their implementation poses significant challenges. Despite the critical importance of compliance, many institutions struggle to keep pace with evolving requirements and the operational burdens they entail.
Data Collection and Management
One of the primary challenges is data collection and management. Institutions must gather vast amounts of information from their clients and ensure its accuracy. According to a report by PwC, 54% of financial institutions cite data management as their biggest hurdle. This process is time-consuming and requires sophisticated systems to manage and store the data securely..
Understanding Regulatory Requirements
Understanding regulatory requirements is another significant obstacle. FATCA and CRS regulations are complex and can vary by jurisdiction, making it difficult for institutions to stay informed and compliant. A Deloitte survey indicates that 43% of institutions find interpreting and implementing these regulations challenging. This often necessitates ongoing training and consultation with experts to ensure compliance.
System Integration
Additionally, integrating CRS and FATCA requirements with existing systems can be problematic. Many institutions operate on legacy systems that are not easily adaptable to new compliance requirements. According to KPMG, 39% of financial institutions struggle with system integration, leading to delays and increased costs. Ensuring that staff are adequately trained and aware of the latest regulations is critical yet often overlooked.
Given these challenges, we would love to hear your thoughts: