The Rock’s financial services sector must act now to embrace FATCA, warns Nicola Smith, CEO of Gibraltar-based fund administrator, Helvetic.
US citizens are legally required to pay tax on their income, no matter where they live in the world and Gibraltar (along with many other countries) has signed a Model 1 Intergovernmental Agreement (IGA) with the United States that means all qualifying financial organisations in the territory now have to submit details of financial accounts on all US citizens to the Gibraltar tax authorities under the terms of the IGA.
Smith says: “What many do not realise is that the administration costs for collating and sending the information have to be met by the financial organisation and not the US government. All businesses that handle the financial accounts must now comply and know how to submit information and in what timescales.”
To help prepare for the new regulations, which came into force on 1 July 2014, the Gibraltar Association of Compliance Officers (GACO) held an event in association with Thomson Reuters, which aimed to address concerns surrounding the arrival of FATCA, notably the complexities of on-boarding customers for both US and UK FATCA.
Smith says: “The strong turnout from industry representatives clearly demonstrates that the Gibraltar financial community is actively engaging in discussing and demonstrating their progress on pressing regulatory issues, in particular executing and launching the final stages of a FATCA solution. We, at Helvetic, have prepared for the additional workload in light of the new requirements.”
These sentiments were supported by Charles Foster, Risk Director of Helvetic and committee member of GACO: “It’s imperative we work together with the financial community of Gibraltar in order to provide them with all the necessary information in light of new regulatory compliance measures.
“Other countries have seen organisations turn US citizens away from their services because of mistaken perceptions about complexity in complying with FATCA and that registration is only required if you deal with US citizens. This is not the case, it is highly likely that if you are a Foreign Financial Institution you will need to register whether or not you have clients who are US citizens.
“The event explained that compliance with the new regulations is not onerous and that all foreign financial institutions need to work with their service providers to find a solution to allow them to comply.”