With the ATO'S global reputation at stake and the recent fallout from CBA's AML experience still reverberating, CRS should not be taken lightly warns expert.
May 29, 2018
Australian financial institutions expecting leeway from the ATO in regard to this year’s inaugural CRS compliance deadline may be in for a rude awakening, warns Dr Tony Jansen, one of Australia’s leading experts on Regtech as it applies to FATCA and CRS.
Common Reporting Standard (CRS) is an inter-governmental agreement between the world’s Tax Authorities designed to detect tax evasion. All businesses that manage the financial accounts of foreign tax residents living in Australia must report to the ATO for the first time on July 31.
“The ATO will not have its international reputation sullied by not being seen to enforce FATCA and CRS compliance. These higher-level stakes mean financial institutions obligated to report will be expected to maintain the country’s reputation,” says Dr Jansen.
“Where other domestic tax requirements allow the ATO to be constructive in assisting companies and individuals to meet their tax obligations, this is a different ball game.”
AUSTRAC’s pursuit of the Commonwealth Bank in making it accountable for significant transgressions of Anti-Money Laundering and Countering the Financing of Terrorism law through the provision of its ‘intelligent deposit machines’ took years to develop. CRS is quite different in this regard as the big data requirement in the act of complying will mean a faster and more accurate transparency of data to the ATO. Negligent organisations will therefore be known to the regulatory authority far sooner than occurred with AUSTRAC.
“It’s not a matter of ‘if’ but ‘when’ the ATO decide to crack down, and given there is so much more at stake for the ATO, I wouldn’t be surprised to see a hard-line approach by the Australian government sooner rather than later on this one,” says Dr Jansen.
For financial leaders who can see the writing on the wall, the immediate action required is to adopt a robust strategic solution fit to meet the CRS compliance regime. Taking immediate action in this regard will not only avoid investigation, but a strategic solution will save an enormous amount of money from Day 1.
“Trying to create a short-term tactical solution is a false economy on CRS,” says Dr Jansen. “CRS requires a systems mentality and not a reporting mentality – it’s far better to invest once to deliver a perennial solution, rather than continue to shell out money each year to meet the compliance requirement as a short term tactical response.”
GCS Agile is Australia’s leading specialist consulting group to advise companies on how to best meet their FATCA and CRS compliance obligations, and includes issues of digital strategy, taxation, and technology. As a first step, the team will produce within two weeks a Risk Assessment Report that provides full details on what specific actions a business needs to take to be compliant by July 31.
GCS Agile is also the provider of FACS, the world’s leading software platform built specifically to address FATCA and CRS end-to-end compliance, and also works in different jurisdictions worldwide to understand the nuances of Tax Authorities’ requirements for their CRS reports locally.
For more information, contact:
Chief Digital Officer, GCS Agile
+61 451 121 774
Compliance is complex and costly for the Financial Services Industry
- Compliance costs the global financial services industry over $270B annually.
- Fines alone have cost global lenders at least US$321B since the 2007-08 financial crisis.
- CBA’s AML compliance breach announced on August 3, 2017, has resulted in C-Level role changes, a greater than 10% share price drop in the month following the announcement, and an as-yet unannounced fine expected to be in the hundreds of millions.
- Based on ATO published penalty rates, a breach of 10,000 non-reported CRS accounts (error rate less than 1%) by a financial institution earning more than $1 billion in revenue will be liable for fines of up to $5.25 billion.
FACS (FATCA and CRS Service)
- Complete end to end service that covers Data Preparation, Identify & Classify, Due Diligence, Reporting, and Audit.
- Highly flexible and configurable.
- Real time dashboard reporting with full work flow views.
- Complete, continuous audit trail and ongoing monitoring.
- Rapid implementation.
- ATO supported functionality and have completed ATO partner program.
- Only FATCA and CRS solution to be registered in ATO ABSIA (Australian Business Software Industry Association).