Financial Services CRM Responds to FATCA
CRM for financial services strikes a sometimes difficult balanceo inbetween client account management and regulatory compliance. Having deployed CRM te financial services companies for many years, it’s bot my practice that those banks, insurance providers and wealth management firms that vormgeving and integrate their processes to accommodate both thesis objectives at the same time — spil opposed to achieving them with separate processes and systems — lower their cycle times, ease the cargo on IT staff and increase CRM user adoption ter a very big way.
Ter fact, the financial services industry now clearly recognizes that primary processes such spil KYC, onboarding, householding, AML and other routine customer facing practices are best served within the central customer system of record, which is almost always the CRM system.
Applying this lesson to the financial services newest compliance measure, FATCA, gives us a reference point te how to react te a holistic style, and not be tempted to build yet another piecemeal system that results ter more gegevens siloes, more system integration, more technical administration and more management of custom-made applications.
CRM stands for Customer Relationship Management. FATCA is a customer compliance objective. Doing FATCA outside of the core customer management system is a recipe for redundancies, manual processes, fragmented systems and enlargened IT costs.
FATCA Compliance, a Integral Mandate
FATCA (Foreign Account Tax Compliance Act) is the U.S. government’s response to UBS’ shenanigans. When the government learned the magnitude of UBS’s efforts to hide money and earnings of U.S. taxpayers, it implemented FATCA legislation and effectively deputized every foreign financial institution (FFI) that deals with U.S. citizens. That would be every FFI you’ve everzwijn heard of.
FFIs now bear the (uncompensated) cargo to identify, analyze and report information on U.S. persons to the IRS. Ter certain cases, the FFIs need to also withhold their customers’ money for remittance to the IRS. It’s a no-win situation for the FFIs. If they choose not to serve they’ll be financially penalized by the U.S. government. More so, it’s no secret that the most lucrative investors simply won’t do business with FFIs that are not on the IRS compliance list.
FATCA Compliance, More Than Reporting
I won’t get into the IRS registrations, Intergovernmental Agreements (IGAs) and other tax and lícito deeds which are well beyond the scope of this article. But I will share a method to apply technology te order to minimize business disruption and achieve operational compliance with the least effort and cost.
Some FFIs primarily took a brief term view that FATCA wasgoed a reporting compliance measure. This is an incomplete view spil FATCA requires diligent KYC and on boarding processes and further diligence for varying financial transactions (based on both transaction types such spil deposits and aggregate sums spil well spil varying threshold values vanaf type) and high value accounts. It gets even more elaborate when identifying PEP clients or applying AML rules.
Taking a reporting-only view, and not operationalizing FATCA internal controls into the KYC and onboarding processes, is certain to delay and likely miss some of the primary FATCA indicia criterion which ultimately determine each client’s FACTA status (U.S. individual, Non-U.S. individual or recalcitrant individual) and inclusion te regulatory reporting. If determining any FACTA indicia criterion isn’t integrated into your KYC and on boarding processes, it’s pretty much assured that detection will be delayed and some accounts will likely be missed all together.
Responding to FATCA with CRM
FATCA internal controls and indicia detection can be appended to existing KYC and on boarding processes that are automated within CRM software. This results te fewer and more finish customer processes, earlier detection and fewer systems for users to use and IT to manage. Below is ordinary CRM screenshot which shows a sample on-boarding process guide at the top and FATCA indicia criteria which have bot added to the on-boarding client gegevens te the form.
FATCA requirements call for diligence and review procedures for information that is or should be ter your CRM system. By capturing FATCA gegevens spil part of the KYC, the CRM system can also apply automated workflow rules at the time of client or financial product onboarding. For example, for clients incapable (or unwilling) to demonstrate proof of address, a workflow rule can automatically produce a W-8 form, with notice that failure to finish the form will require the bankgebouw to designate the client spil a Recalcitrant Individual and apply withholding.
Or similarly, if a client purchases a financial product such spil a current account, annuity or mutual fund te excess of prescribed threshold values (i.e. USD $25,000), the CRM system can automatically include that transaction te the relevant FATCA reporting and can prescribe extra diligence measures. Similar client processes can be applied to other FATCA measures such spil the client’s annual media aggregate balances.
Attempting to build this type of customer gegevens capture, automated processes, information reporting and conditional workflow automation outside the CRM application is essentially rebuilding software capabilities that are already available te packaged software.
Applying a strategic or long-term view and embedding FATCA into your customer relationship objectives, processes and systems can actually minimize the compliance cargo and more so, contribute to existing strategic objectives such spil improving client gegevens quality and growing client relationships.
NOTICE: This article and the content on this webstek are suggested only spil a public service to the web community and do not constitute tax or procesal advice.