Since the United States’ Foreign Account Tax Compliance Act (FATCA) regulation first passed, many financial institutions have relied on home-grown solutions to maintain compliance. Now, with a few years of Automatic Exchange of Information (AEOI) reporting under the belt, the industry has reached a tipping point and in a recent benchmarking survey, most financial institutions indicated they plan to implement an automated AEOI solution in the next year.
What have financial institutions learned from handling AEOI reporting in-house?
- AEOI reporting is resource-intensive and prone to error at every stage of the process.
- It requires you to gather and cleanse account data from multiple sources, determine which accounts need to be reported, validate the information required, and transmit filings.
- While over half of survey participants indicated they were significantly prepared for FATCA, the same group reported that its filings were only 44% accurate.
- Now that these financial institutions understand the resources needed and risks involved with AEOI reporting, they are looking for greater guidance and more automated solutions.
What are financial institutions looking for in an automated AEOI solution?
Financial institutions want a strategic automated AEOI solution that can:
- Efficiently import, cleanse, and reconcile account data.
- Automatically generate transmittals from one location.
- Track deadlines and changing jurisdictional requirements.
What are the benefits of an automated AEOI solution?
The benchmarking survey compared the experiences of those who had implemented a strategic automated solution against those who have not. The survey revealed that over the past two years, as compliance became more complex, those without solutions needed to add four times more resources to maintain global compliance. For those using strategic solutions, filings were twice as accurate and audits resulting in penalties dropped by 4%.
The time is now. Change is in the air as early technology adopters start to reap the benefits of a centralized AEOI reporting solution.
The post Most Financial Institutions Plan to Implement Automated AEOI Reporting Solutions in the Next Year 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