August 16th, 2013
With the recent passage of the US Foreign Account Tax Compliance Act (FATCA), banks are facing looming KYC process deadlines. By July 1st 2014, all financial institutions needs to have onboarding procedures for commercial and institutional clients that are FATCA-compliant. There are deadlines for existing clients that have also been extended to 2014 and 2015.
FATCA presents many problems for financial institutions because of the sheer amount of data it requires. In the past, only shareholders with 25% or greater ownership needed to be disclosed in non-financial foreign entities, but now all with greater than 10% ownership will need to be disclosed. In order to become sufficiently FATCA compliant, financial institutions will have to fully and efficiently utilize past data from anti-money laundering and know your customer (KYC) processes. Since financial institutions will need to collect more data for customers, it will be key from them to balance compliance and customer satisfaction.
