DMS Offshore Investment Services, the world’s largest fund governance firm, has announced the expansion of the DMS FATCA Task Force.
Bringing together experts in compliance, law, finance and technology, the Task Force uncovers best practices for responding to the Foreign Account Tax Compliance Act (FATCA), a sweeping piece of legislation through which the United States aims to ensure disclosure of tax information related to offshore accounts.
Don Seymour, president and founder of DMS, said: "This legislation will transform the investment funds industry and impact investors with offshore accounts. The genesis of the task force began in 2010 when Congress passed the Hiring Incentives to Restore Employment (HIRE) Act, so we have the advantage of being one of the first to tackle the challenges of the regulation. Our team at DMS has researched and formulated ideas about FATCA and how the governance world can best respond to mitigate any impact FATCA can have on the health of the financial industry."
The DMS FATCA Task Force uses proprietary research and technology to help foreign financial institutions (FFIs) successfully navigate the new legislation, which is expected to put tremendous administrative and cost burdens on hedge funds and managers once it goes into effect on July 1, 2014.
The legislation, named by AITE Group as the most significant regulation affecting the hedge fund landscape, requires FFIs to report information to the IRS about financial accounts held by U.S. taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest, or face severe penalties such as a 30% withholding tax.
Additionally, FFIs that fail to comply with FATCA rules could face closure of their accounts, or find themselves locked out from doing business with organizations and counterparties that interact with U.S. financial institutions and compliant FFIs.
In order to avoid these penalties and reputational risks, FFIs must be registered with the IRS by April 25, 2014 to avoid being listed as a non-participating financial institution when FATCA goes live on July 1, 2014.
The IRS will post its first FFI list on its FATCA portal by June 2, 2014, marking all absent FFIs with a non-complying "scarlet letter" that could hinder their ability to do business. This list will be updated monthly.
The FATCA Task Force is led by Peter Stafford, who also serves as Director of DMS’s Legal and Compliance portfolio. He is supported by Jennifer Dimitri and Alaina Danley, who bring extensive experience in management oversight, compliance and legal affairs to a well-rounded team of experts.
The Task Force focuses on the FATCA implications for private funds and how to enhance corporate governance to respond to this specialized oversight responsibility. It also offers to fulfill all the duties of an FRO including:
- Expertise and oversight to address the regulatory risks imposed by FATCA and those under the intergovernmental Agreement and applicable domestic regulations;
- Independent oversight with checks and balances that may not be achieved with a single FRO within an organization;
- Deep Industry relationships achieved through DMS’ longtime service in fund governance and ability to spot emerging trends;
- A dedicated in-house technology team that created the proprietary DMS Tracker, DMS’ market leading fund governance technology that effectively monitors and synthesizes complex information flows to support sound governance decisions, quality assurance and reporting.
Peter Stafford said: "We are not just researching and providing insights. DMS is building upon its fund governance foundation and providing clients a solution that allows them to address FATCA in terms of taxation, reputation, marketability and ultimately protects their assets under management."