Managing the risks, identifying the opportunities

In a period of fiscal consolidation, the priority for many countries is to ensure that all taxpayers pay their fair share of taxes. This is also the aim of the G20 / OECD BEPS (Base Erosion and Profit Shifting) initiative: to crack down on tax avoidance, harmful practices and aggressive tax planning. Moreover, the G20 also wants to build more resilient financial institutions, increase transparency and market integrity, and fill regulatory gaps. In the area of exchange of information, the introduction of the Common Reporting Standard (CRS), which draws extensively on the intergovernmental approach to implementing FATCA (the Foreign Account Tax Compliance Act), is a huge challenge for all reporting financial institutions, i.e. banks, life-insurance companies, investment funds and investment vehicles. For banks that keep US securities in custody for their clients, compliance with the Qualified Intermediary (QI) agreement will certainly remain one of the biggest challenges because a senior manager will have to certify to the IRS that the bank is fully compliant.