Global banking trends

Global banking trends

Fatca

banking trends and account opening regulationsBecause of the USA FATCA rules, global banks will refuse to accept American bank signatories, except for large US Clients. Over the coming years, every bank will comply with FATCA for US Clients.

Dodd-Frank

According to Dodd-Frank regulatory change, big banks will likely become bigger while smaller ones will struggle to meet legal and regulatory requirements. The goal is to simplify finance and lending, thus an increase in bank mergers and acquisitions.

  1. Global banks continue to tighten international corporate bank account opening procedures, their internal compliance departments completing more thorough due diligence of Clients. Consequently, our Clients should expect the bank account approval period to take up to 4 weeks. Furthermore, global banks now require evidence of proof of business in the country where the corporate bank accounts will be, including sales contracts or lease agreement;
  2. Global banks consider offshore entities who wish to engage in international corporate banking in their jurisdiction higher risk than local incorporated entities. Hence, when opening such a corporate account, Healy Consultants explains to the banks why an offshore corporate account is needed by our Client by presenting a business plan, proof of local business etc;
  3. Healy Consultants will be pleased to help our Clients setting up international gold bullion accounts.

Common Reporting Standard

In 2014, the G20 countries endorsed the OECD’s proposal calling for all nations to adopt a multilateral information sharing agreement to help counter tax evasion. It has been named the Standard for Automatic Exchange of Financial Information in tax information (hereafter referred to as “AEOI”).

The Common Reporting Standard (or the CRS) is the component underpinning the AEOI. In short, the CRS details the DD requirements and reporting requirements that countries should follow to accurately determine tax liability of their residents. A group of 47 countries commenced implementation of the CRS on the 1st of January, 2016, and Healy Consultants has prepared a summary below to explain what this means for our Clients:

  1. Under the CRS, financial institutions (reporting entities) will annually report financial information of their customers to their national tax authorities, which will collate the data and exchange this information with their counterparts in the jurisdiction where the customer is tax resident;
  2. Financial institutions resident in a participating country include banks, brokerage firms, investment companies, and certain collective investment and insurance vehicles and trusts;
  3. The reportable customers will be individuals and entities (including partnerships and trusts) which are tax resident in the countries party to the AEOI agreement. The following information will be shared with the tax authorities: i) tax identification number(s); ii) account balances; iii) investment income including dividends, interest payments and annuities; and iv) proceeds from the sale of financial assets;
  4. All individuals/entities wishing to open bank accounts will be required to provide certain DD, based upon which the bank will determine the tax residency of the individuals/ultimate shareholders. If the bank determines the individuals involved are tax resident in a participating country, then all the aforementioned information will be passed on to the tax authority in the customer’s country of residence;
  5. For pre-existing entity bank accounts, the account information will only be reportable if i) the account balance at the end of the year exceeds US$250,000 or ii) if the entity is a holding company and any one of its ultimate shareholders is considered tax resident in participating countries. However, pre-existing individual bank accounts will not enjoy such privilege and all their account information will be deemed reportable annually.

Implementation Timeline

  1. An “Early Adopter” group of 56 jurisdictions commenced implementation of the CRS from 1st January, 2016. In other words, all new customers of reporting institutions in these countries must declare their tax residency to the banks and other financial institutions;
  2. For pre-existing financial accounts, financial institutions in participating countries will complete their review of tax residency for high value individual accounts (with balance higher than US$1m) by the 31st December, 2016, and low value individual accounts (with balance lower than US$1m) and entity accounts by the 31st December, 2017;
  3. The first exchange of information is expected to take place between 56 jurisdictions in September, 2017. A further 41 jurisdictions are expected to participate in the information exchange in September, 2018.

Contact us

For additional information on our international corporate bank accounts services, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Simon Guidecoq, directly:
client relationship officer - Simon