Introduction

The Foreign Account Tax Compliance Act (FATCA) is a U.S. law designed to combat tax evasion by U.S. taxpayers using foreign accounts. For financial institutions, FATCA compliance is critical to avoid severe penalties and ensure transparency in cross-border financial activities. This 5-day advanced course will provide participants with a deep dive into FATCA regulations, the implementation process, and the best practices for ensuring compliance. It will focus on the key responsibilities of financial institutions in relation to FATCA reporting, the management of withholding taxes, and the use of due diligence procedures.

This course will help financial institutions navigate the complexities of FATCA, stay up-to-date with evolving regulations, and integrate effective compliance measures into their operational framework.

Objectives

By the end of this course, participants will:

• Understand the core principles and regulations of FATCA and their implications for financial institutions.
• Develop strategies for implementing effective due diligence processes to identify U.S. account holders.
• Learn how to complete FATCA reporting forms, including the IRS Form 8966 and FFI agreement.
• Understand the withholding tax obligations under FATCA and the impact of the global financial system.
• Gain insights into how FATCA interacts with other international tax compliance regulations, including CRS (Common Reporting Standard).
• Master the process of FATCA risk management to ensure that financial institutions minimize penalties and non-compliance risks.
• Learn about the latest updates and changes in FATCA regulations and how to stay compliant in an evolving regulatory landscape.

Who Should Attend?

This course is ideal for:

• Compliance officers and risk managers in financial institutions responsible for FATCA compliance.
• Tax professionals working within financial institutions to ensure proper tax reporting and withholding.
• Financial institution staff responsible for reporting and due diligence on U.S. account holders.
• Accountants and auditors involved in FATCA-related activities, including audit and reporting.
• Legal professionals dealing with FATCA-related legal aspects for financial institutions.
• Consultants who specialize in tax compliance and international regulations.

Course Structure – Two Interactive Sessions Per Day

Day 1: Introduction to FATCA and Its Impact on Financial Institutions

Session 1: Overview of FATCA Regulations

• Introduction to FATCA: Purpose, scope, and historical context.
• Key principles: Information reporting, withholding requirements, and due diligence procedures.
• Who is affected: Foreign financial institutions (FFIs), non-financial foreign entities (NFFEs), and U.S. account holders.
• Understanding FATCA compliance and the global impact on financial institutions.
• Case study: How FATCA has impacted financial institutions globally.

Session 2: FATCA Registration Process and Reporting Obligations

• How financial institutions register with the IRS under FATCA.
• Completing the FFI registration process: Requirements and key deadlines.
• FATCA reporting obligations: Form 8966 and annual reporting.
• Self-certification of U.S. persons: How financial institutions manage account holder declarations.
• Practical exercise: FATCA registration and reporting process walkthrough for an FFI.

Day 2: Due Diligence Procedures for FATCA Compliance

Session 3: FATCA Due Diligence Requirements

• The role of due diligence in FATCA compliance.
• Identifying U.S. persons: Procedures for account holder identification, including KYC (Know Your Customer) and self-certification forms.
• High-risk account holders: When and how to apply enhanced due diligence.
• The role of third-party intermediaries and the due diligence requirements.
• Practical session: Conducting FATCA due diligence on new and existing accounts.

Session 4: FATCA Certification and Self-Certification Processes

• What is self-certification and how does it work for FATCA compliance?
• Understanding Form W-9 and Form W-8BEN for account holder certifications.
• Handling documentary evidence and follow-up procedures to ensure FATCA compliance.
• Case study: Managing self-certification in different jurisdictions.
• Practical exercise: Reviewing self-certification forms and identifying issues in the process.

Day 3: Withholding Taxes and Cross-Border Financial Implications

Session 5: Withholding Tax Requirements under FATCA

• Understanding the 30% withholding tax on U.S.-source income for non-compliant accounts.
• How to apply FATCA withholding requirements to interest, dividends, and payments.
• Procedures for withholding tax on U.S. investment income.
• Identifying exceptions and exemptions to withholding tax under FATCA.
• Practical session: Calculating withholding taxes and applying the correct FATCA exemptions.

Session 6: FATCA in the Context of International Finance

• How FATCA affects cross-border transactions and international investments.
• Understanding the FATCA Intergovernmental Agreements (IGAs): Model 1 vs. Model 2.
• Interaction of FATCA with OECD Common Reporting Standard (CRS) and other international tax compliance regimes.
• Case study: FATCA and its impact on international banking and investment management.
• Group discussion: Best practices for managing cross-border FATCA compliance.

Day 4: Risk Management, Penalties, and Compliance Assurance

Session 7: FATCA Risk Management

• Identifying FATCA compliance risks: Common pitfalls and areas for improvement.
• Developing a FATCA risk management framework: Key controls, monitoring, and reporting processes.
• How to integrate FATCA compliance with global financial crime prevention measures.
• Ensuring ongoing compliance: Training, audits, and updates to compliance systems.
• Practical session: Developing a FATCA risk management plan for a financial institution.

Session 8: Penalties for Non-Compliance and Compliance Assurance

• FATCA penalties for non-compliance: Financial and reputational risks.
• How to avoid penalties through effective due diligence and reporting.
• Best practices for maintaining a compliance culture in financial institutions.
• Review of IRS audits and potential penalties related to FATCA violations.
• Case study: Analyzing a financial institution’s experience with FATCA penalties.
• Group exercise: FATCA compliance self-assessment and corrective actions.

Day 5: Practical Applications and Updates in FATCA Compliance

Session 9: Implementing FATCA Compliance Systems and Tools

• Overview of compliance software and automated tools for managing FATCA compliance.
• Integrating FATCA compliance systems with existing financial systems (e.g., core banking systems).
• How to use data analytics to enhance FATCA reporting and reduce the risk of errors.
• Training staff and stakeholders on FATCA systems and compliance procedures.
• Practical session: Implementing FATCA software tools and using them for reporting.

Session 10: Recent FATCA Updates and Future Trends

• Review of the latest updates to FATCA regulations and their implications for financial institutions.
• How FATCA is evolving in response to global tax compliance trends.
• The future of FATCA and its integration with global tax initiatives.
• How financial institutions can prepare for future regulatory changes in FATCA compliance.
• Final project: Simulating a FATCA compliance program for a global financial institution.

Conclusion & Certification

Upon successful completion of the course, participants will receive a Certificate of Completion in FATCA Compliance for Financial Institutions, demonstrating their knowledge and ability to effectively manage FATCA compliance within their organizations.