For financial institutions looking to proactively comply with global reporting standards including Foreign Account Tax Compliance Act (FATCA), Crown Dependencies and Overseas Territories (CDOT) legislation and the Common Reporting Standard (CRS) while minimizing costs and risks, our recent report showed that an Automatic Exchange of Information (AEOI) solution is key. In evaluating such solutions for your company, it is critical to ensure that your options best meet the needs of both the C-suite and your IT teams to avoid frustrations with onboarding and overall management, and ensure seamless compliance.
Top Questions to Ask in Evaluating an AEOI Solution
In the recent benchmarking survey by the Aberdeen Group, we sought to uncover the top challenges financial institutions face with global tax compliance initiatives. In our report, several challenges were cited, such as cost and deadlines, in regards to the new global standards. However, the report also revealed that employing an AEOI strategy creates added efficiencies, enabling these global organizations to centralize necessary processes and address challenges head on. In fact, those with AEOI solutions are 93% more likely to be able to generate all regulatory transmittals from one location!
The top five questions you should ask as you evaluate potential AEOI solutions.
- Does it keep up with critical deadlines? A key component in mitigating the risk of non-compliance is submitting required documents on time. For financial institutions with a global presence, it can be a challenge to keep up with updates and new deadlines for each jurisdiction, and taking on this responsibility internally heightens the risk of missing a new deadline. An effective AEOI solution should track these deadlines and proactively alert you to changes. You’re not only buying an automated solution, you are also investing in AEOI compliance expertise and thought leadership.
- Is it flexible? Any centralized solution should offer transparency for multiple departments, with the ability to access important data in real-time for mapping and reporting. This is especially valuable to global financial institutions with employees doing business from locations around the world. An AEOI solution that is flexible to scale as needed will safeguard any issues with data storage and access to critical compliance details.
- Are customizations available to fit specific workflows? Within any organization, certain workflows, and internal deadlines are what helps drive successful performance. Since AEOI solutions provide automation capabilities to help boost accuracy and internal efficiencies, ensure your solution can also customize deadlines and alerts that follow your company’s specific workflow and processes.
- How complicated is the onboarding process? For financial institutions responsible for global compliance, onboarding a centralized solution can be a daunting task for both IT and accounting teams. Inefficient implementation can be extremely time-consuming and result in greater costs as a result of unnecessary downtime. Avoid the headaches with an AEOI solution that can be easily integrated into your existing systems, has a support team to help ease the setup process, and a modern easy-to-use interface.
- Does it automate manual processes? AEOI solutions outperform non-AEOI solutions with automated generation of filings 54% to 36%, according to our survey. Facilitating workflows with automation not only eliminates the need to hire additional staff but also improves accuracy and preserves internal resources. AEOI solutions that offer automation also help companies stay up to date by automatically updating workflows based on the latest regulations. There are also frequently hidden resource costs that an automated solution eliminates: financial institutions with tactical solutions often have dedicated teams and also part-time employees who work on reporting. These “part-time” efforts are hard to get a handle on in terms of total cost when managing global reporting in-house.
The post Evaluating AEOI Solutions: Top Questions to Consider appeared first on Sovos Compliance.
About the Author
.Scott Freedman is director of product strategy for AEOI solutions at Sovos Compliance. Scott has over 15 years of experience in strategic marketing and product strategy. He has worked for business-to-business software and SaaS solution companies like Thomson Reuters, and with Fortune 500 companies as a business consultant. Scott has a background in law and earned his JD and undergraduate degrees from the University of Chicago and University of Illinois.More Content by Scott Freedman