Looking at it from a tax compliance perspective private banking has three key challenges. Guo Jian, Global Tax Product Manager at AxiomSL, explains
- Regulatory updates. Change is the only constant in the FATCA/CRS space. Every year, we are seeing regulatory updates – operational, compliance or from a technical perspective. Examples of this include the number of reportable jurisdiction changes which happen frequently – often jurisdictions are added to the list and in certain circumstances, they could be removed. In addition, the Schema update – CRS 2.0 was its first schema change that impacts every financial institution one way or another – more changes will come as regulators strive to make the exchange of information more efficient, and the regulation more common and standard.
- Growing burden on IT teams. Aside from the evolution of the regulation each year, the private banking world must cope with the complexity of its data due to client confidentiality. There is a degree of complexity when it comes to understanding the granularity of data required for reporting – especially so in private banking which involves a complex account set up. In addition, discretionary and non-discretionary trust accounts involving HNWI with ownership in entities with multiple layers of hierarchy structure and varying controlling person categories will need to be managed, together with the dynamic products.
- Meeting the demand from the regulators, both auditors and clients. In recent years, the tax regulators are paying more and more attention to the data quality of the reports. The audit trial is vital as the amount of data accumulating over the reporting years, not just on the records for the latest submission, but also what has been submitted in prior years requires a great deal of transparency and accountability. While being compliant on a regulatory front, clients will want to know what their financial institution has reported on them – this data will need to be translated
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