Linedata Adds Fatca Tax Withholding, AML Upgrades

Technology services provider Linedata has added tax withholding functionality to its Mshare transfer agency software to help users manage the requirements of the Foreign Account Tax Compliance Act (Fatca) and new anti-money laundering (AML) document-management capabilities.

Mshare already includes the ability to categorize clients according to the requirements of Fatca and to flag those that are not compliant with the US anti-tax evasion measure. The latest release means Mshare will now also withhold the mandatory 30% tax on distributions of US-sourced income to those that have been classified as non-compliant.

"Once you have flagged your customers as compliant or non-compliant, what happens from the valuation point of view is they will know where that US-sourced income will come from and it will be flagged. You could have 100 or 200 investors in that distribution, but Mshare will automatically take out those non-compliant investors and charge them accordingly. So it all happens automatically," says Justin Hayes, Linedata's Dublin-based Mshare product manager.

Hayes says the Mshare upgrades have been introduced to help firms avoid the risk and cost of attempting to manage Fatca withholding in a manual fashion, using spreadsheets. He says the upgrades provide auditability, allowing users to see how their clients were classified and how much tax was withheld.

Hayes adds the Mshare customer classifications are not restricted to Fatca, but can be altered by users to meet the needs of other similar measures. "It is not just about Fatca—it is about the Organization for Economic Co-operation and Development's Common Reporting Standard [for the global exchange of financial account information] down the road. You have to think about all of these things to stay ahead of the game. That is what we have done with Mshare."

Separate upgrades to Mshare mean users can now search for AML documents that are soon to expire and send automatic alerts to customers asking them to update documents before they become invalid.