With a month to go before the Common Reporting Standard comes into force in the UK, Sovos organised four financial institutions to hear first-hand from the UK’s financial regulator, the HMRC, and get a 360 degree view on how to prepare for CRS.
In 2017, fifty four ‘first wave’ jurisdictions will begin automatically exchanging data using the OECD-devised Common Reporting Standard (CRS) and with just four weeks to the start of the year, senior compliance officers from several financial institutions used the 3rd Sovos AEOI Networking Series Event to ensure that their organisations were sufficiently prepared for this momentous change to their industry.
Entitled ‘Fail to Prepare, Prepare to Fail,’ the event took place in Canary Wharf, London on November 30. Compliance Officers and Tax Managers from a broad range of financial institutions including international investment banks, private banks, asset managers and wealth managers, as well as senior consultants from professional services firms used the opportunity to question two senior representatives from the UK’s regulator, HMRC who both gave presentations on various aspects of CRS and answered questions from delegates.
These keynote speakers included Elinor Crockford, a Policy Advisor from the HMRC’s Exchange of Information team and Jennifer Haslett from the HMRC’s Centre for Offshore Evasion Strategy where she works on Corporate Crime & international Engagement. Both speakers are heavily involved in implementing the HMRC’s CRS strategy and helping UK-based financial institutions to prepare for it.
Delegates also listened to a debate that took place between a panel of speakers who between them represented a 360 degree view of AEOI, including:
- Elinor Crockford, a keynote speaker who offered a perspective on behalf of the regulator
- Vanessa Houlder, Tax Correspondent on the ‘Financial Times’ provided a perspective from the media
- David Wren, Director of Tax Policy at the British Bankers Association, provided a perspective from the banking industry’s own professional trade body
- Rob Smith, a Senior Consultant from Hansuke and Umer Hamid from Accenture’s Finance & Risk Services Global Practice both offered perspectives from consultants (both work for professional services firms that advise banks)
- Scott Friedman, Director, Product Strategy at Sovos Compliance provided a perspective from a vendor
The panel discussed whether financial institutions were sufficiently prepared for CRS. The audience had earlier completed a survey on this topic which indicated that they thought they were – 82% responded to the survey that they felt confident their ‘organisation’s strategy for implementing the CRS will be successful.’
Nearly half (46%) of the sample used ‘bespoke internal non software’ as their organisation’s means of meeting their compliance and reporting obligations.
However, when later asked ‘in your personal opinion, what is the largest challenge that your organisation faces in implementing its response to CRS?’ the overwhelming majority, 64%, replied ‘operational processes fit for purpose.’
This survey result begs the question – the industry may feel confident in its preparations for CRS, but will its systems cope with the extra demands soon to be placed on them?
Similarly, research from the Aberdeen Group found that while 64 percent of financial institutions indicated they felt significantly prepared for AEOI, in reality, less than half of FATCA filings to date are accurate and complete, indicating that many financial institutions may feel more prepared than they actually are.
Financial institutions, as represented by the delegates at the event not only have concerns about the fitness for purpose of their systems, but the speed with which they can react to the advent of CRS. In an online poll carried out by Sovos during the event, 69% of the delegates that answered the question thought it would ‘take months to report and be compliant to new legislation.’
These findings are consistent with those that Sovos obtained from another survey earlier this year. Sovos partnered with the Aberdeen Group to survey leaders at over 100 financial institutions to better understand what they found most challenging and concerning about Automatic Exchange of Information (AEOI) reporting (including FATCA, CRS, and CDOT) and how they were preparing for the new requirements.
In that survey, the majority, 64%, of respondents felt they were significantly prepared but only 44% of their FATCA filings were accurate and complete.
Clearly, hope transcends everything. But will it be enough to cope with the advent of CRS?
- Sovos recently commissioned the Aberdeen Group to survey leaders at 100 top financial institutions to learn how they are managing AEOI and best practices for staying compliant. Download the report here.
- Sovos regularly commissions surveys and organises events so as to stay close to our customers and offer them regular opportunities to share best practices and hear first-hand from industry regulators.
- We’ll be publishing more information based on this event very soon and will be organising further events in 2017.
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