Perhaps unsurprisingly in the current regulatory environment the details of FATCA regulations have not yet been clarified, institutions will need to make serious and costly modifications to their internal systems, control frameworks and processes in order to be compliant by 1st January 2013. However as this deadline coincides with a number of other regulatory initiatives surely there are a number of issues which need resolving if this is to be met?
To complicate matters further, it now seems that many other countries will aim to introduce their own regulations mirroring FATCA’s aims. Nigel Fleming, Director for International Tax at BlackRock, implied that FATCA is an initial framework for a global tax system which other countries could then implement – this would cost already strapped for cash firms billions.
Adaptability is often cited to me as a key component in successful change programmes and if FATCA programmes are to stand the test of time then surely they should be designed to meet the evolving regulatory landscape. Therefore it seems the firms which are investing heavily in proactive widespread organisational change rather than a reactive patchwork approach to regulation are thought to be best placed for success.
Nevertheless we do not live in an ideal world and for larger institutions these challenges are both complex and wide ranging and there are concerns that many programmes are being delayed. Indeed, some FATCA programmes are being swallowed up into broader “Financial Crime” programmes. However there is a danger that as these programmes become bigger (and inevitably more expensive) the finer details regarding FATCA may be lost.
Therefore the most prudent approach for firms must surely be to be ahead of the curve – don’t wait for regulatory deadlines or releases; now is the time to define a strategy for moving forward and allocate resources where required, whilst maintaining a flexible approach to change.
In an era of perhaps unprecedented uncertainty within financial services, the only certainty is that these regulations will come into place sooner rather than later. I am interested to hear your thoughts please click here.