The KPMG AEOI Health Check is a detailed review of processes and procedures to help ensure compliance with both the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) and identify any gaps. The complementary KPMG Risk Framework helps to establish ongoing controls and compliance.
Reporting information on “Financial Accounts” to local tax authorities under AEOI has been required in the Wave 1 (early adopter) jurisdictions since 2017. AEOI is a challenging compliance obligation where the reporting process will highlight the accuracy andcompleteness of data and documentation obtained from all relevant account holders.Whilst many organisations have implemented projects to meet the initial reporting deadline, it is important to consider that this an on-going annual requirement which must be integrated into Business As Usual (BAU) activities with appropriate controls andgovernance
The initial legislation is likely to evolve in many jurisdictions making it challenging to stay aware and in control of these changing requirements without a robust governance and control mechanism.
KPMG has developed two solutions to help financial institutions navigate this complex and changing environment:
1. The AEOI Health Check – A detailed review of the current implementation and approach to identify gaps in existing AEOI processes (internal procedures and policies, processes, documents, data collection, reporting systems and reports, etc.).
2. The AEOI Risk Framework – A review of an existing risk framework or assistance with implementing a new AEOI risk framework to identify gaps that may exist, ensure that sufficient controls are in place, review effectiveness and completeness to help determine how compliance is evidenced.
Having the right processes and procedures in place is not the only challenge: there must be good controls to help ensure the financial institution is doing what it should to meet its AEOI obligations.
For all workstreams – the end-to-end AEOI processes are reviewed in detail covering:
— Entity and product classification
— Client on-boarding and review of preexistingaccounts
— Change in circumstance
— Governance and compliance
Following this we will conduct in-depth structured interviews with key personnel and perform live end-to-end process walk-throughs to fully establish the processes being followed.
End-to-end testing will then identify any issues both with the underlying systems data and the completeness of reporting that data. Statistical and targeted sample selection can help identify and review all possible scenarios within the client lifecycle.
The Health Check uses both a top-down approach to identify deficiencies and inefficiencies in the existing processes and also a structured and methodical bottom-up approach using checklists and enquiry toolst o help identify areas of non-compliance.
Using checklists, questionnaires and reviewing supporting documentation, we will obtain a thorough understanding of each of the organisation’s AEOI business processes.
A review of internal and external communications to help establish whether regulations are clearly explained, implemented and communicated in such away that they can be understood by the recipients. The client experience is key for all businesses.
Financial institutions need to keep track of how they incorporate ongoing AEOI processes into their everyday business so that it becomes standard practice.
Outputs from the AEOI Health Check and Risk Framework
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