Stuart Lipo

May 31, 2018|5 Minutes

Your ‘Bible’ to Compliance


Compliance is a never ending road and your responsible officer and compliance department have a significant role to play to ensure you are meeting your regulatory obligations.

In a previous post we briefly talked about responsible officers, compliance departments and their efforts to ensure that their companies are compliant with regard to the QI and FATCA regulations.

Since then, the IRS has issued numerous updates, resulting in a new QI Agreement that describes the QDD regime relating to 871(m) (Revenue Procedure 2017-15) , an updated FFI Agreement (Revenue Procedure 2017-16) and an updated Withholding Foreign Partnership Agreement and Withholding Foreign Trust Agreement (Revenue Procedure 2017-21). As if there wasn’t enough to keep track of in this space!

Of course, with all these updates and changes, there has also been a plethora of updated forms, instructions and publications that you will need to use to manage your data, and report efficiently, and – of course – remain compliant.

Running to Stand Still

One of the key responsibilities of the RO and compliance department is to ensure that all of these changes and updates are noted, implemented and reflected in the compliance program. Remember, the existence of a written compliance program is mandated in the QI agreement and failing to have one in place is an event of default under the terms of the agreement. If any changes are not reflected in your compliance program and acted upon, it could have a severe effect on your company’s ability to meet its regulatory obligations.

As we whizz through the year, we have to continuously update our template compliance program documentation and work closely with our existing clients to get their compliance programs updated with the new information, as well as amending their policies and procedures to ensure they relate to the updates and fit our clients’ corporate strategies. These changes will have a clear knock on effect on the workload and resources required to do the work, and may potentially require operational change in business policies. One example would be the validation rules and processes for the W-8 forms that need to be updated to ensure the form is valid for the purpose of collection. There are potentially three reasons for collecting and validating a W-8BEN form: to document Chapter 3 status, to document Chapter 4 status and to claim treaty benefits. Your operational practices will depend on how you are intending to use the form. However, at a policy level, you need to have policies and procedures in place to handle the introduction of new versions of forms series and the phasing out of older forms across all of the relevant business functions.

The Future

The future looks, well, not so much bright but definitely busy!

There is more change happening outside the world of the QI and FATCA regulations. FIs must not forget about the ‘new’ AEoI/CRS obligations and the reporting that came in to effect from September 2017. FIs will no long just be reporting to the USA, but will now have to implement policies and procedures to cope with reporting residents from various countries back to their local tax authorities.

These regulations will affect the policies and procedures of FIs and will, just like the QI and FATCA regime, require a ‘living’ compliance program to ensure a smooth outcome. If you are interested to see how this will potentially affect you and the steps needed to produce a Compliance Program, start with our blog post Remember your New Reporting Obligations Under AEoI / CRS.

And Finally…

Although it may seem like a lot of work and require a lot of resource, a finely tuned and maintained compliance program is essential to help establish a greater understanding of the regulations within your organisation, and lay out what is expected of the various departments that have touch points with clients receiving US-sourced income under QI regulations and income paid to US persons under FATCA regulations, so that the business as a whole can remain compliant.

If you need help creating your own compliance programme, feel free to contact us by emailing [email protected] or read our latest book: GATCA: A Practical Guide to Global Anti-Tax Evasion Frameworks.

Image by @Kiwihug

Stuart Lipo

Stuart joined TConsult in 2015 and has risen to the role of senior consultant, taking the lead on complex cases for clients with Qualified Intermediary, FATCA and CRS compliance issues. Stuart co-authored G.A.T.C.A – A Practical Guide to Global Anti-Tax Evasion Frameworks and delivers regular interactive training sessions both internally and externally.

Prior to joining TConsult, Stuart worked in a variety of roles within the financial industry, including team leader, paraplanner, administration, client relations for independent financial advisor companies.