Shouldering Fatca Responsibility

Now, less than a month away from the July 1 deadline for compliance with the US Foreign Account Tax Compliance Act (Fatca), the industry is still looking at both parts of what I once called a "two-part endgame."

The first part, the US Internal Revenue Service's W-8BEN-E form to be used to file under Fatca, has been published, but instructions are still pending and a revision is expected before the form is supposed to go "live" in September. In other words, not much has changed in this part of the "endgame" since I last looked at it in this space two months ago.

The second part, which falls more squarely on the financial services industry's shoulders, is launching the necessary data management technology to comply with Fatca. In a poll taken during Inside Reference Data's webcast last week on Fatca compliance, 43% of audience members said they have processes in place for July 1 and another 43% said they are working on getting those processes ready, leaving only 14% whose firms don't have processes ready or anything underway.

Yet even with this apparent high readiness, there is still unfinished business. Fatca data reporting will have to be flexible enough to contend with multiple intergovernmental agreements between the US and various other countries for implementing the regulation. About 41% of webcast poll respondents said their reporting may not be or wasn't flexible enough. And as Peter Ku of data integration software provider Informatica said in the webcast, data quality is not high enough to satisfy the firms his company serves.

This may not necessarily mean, however, that single dedicated projects addressing Fatca are the way to go. Fatca's demands are similar to other regulatory and filing rules, including Comprehensive Capital Analysis and Review (CCAR, a US standard), Basel III and BCBS 239, observed Ku. More firms are investing in holistic platforms that address common data elements such as quality, address standardization and issues with counterparty data, he added. In fact, overall data quality certainly includes the latter two elements.

So in this final month before the deadline, the elements to be ready are certainly there and available. It's now a matter of making the connections and plugging the functions in where they belong for that last mile.