Agenda Topics Speakers Ruth Kelly-McEwen – State Street 1. AEOI Regulatory and Technical Fiona McGinley – SMT Fund Services Update Amanda Murphy – EY Deirdre Free – Revenue Commissioners 2. Revenue 2018 AEOI Update Philomena McShane – Revenue 3. Revenue 2018 AEOI Reporting Update Commissioners Michelle O’Neill – Revenue Commissioners Valerie Cooke – BNY Mellon 4. AEOI Reporting Lessons Learned & Maeve Kerins – PwC Practical Challenges impacting Kieran Horan – Northern Trust Funds 5. Panel Q&A discussion All irishfunds.ie
AEOI Regulatory and Technical Update Ruth Kelly-McEwen – State Street Fiona McGinley – SMT Fund Services Amanda Murphy – EY 3 irishfunds.ie
AEOI Regulatory and Technical update • OECD AEOI Updates • European Union AEOI Update • Impact of 4 th and 5 th AML Directive on AEOI • GDPR and FATCA/CRS • Updated CRS Handbook – (effective AEOI compliance & audit framework ) irishfunds.ie
AEOI Regulatory and Technical update OECD MDR EU DAC 6 • Provide Tax authorities with advanced • EU DAC 6 requires disclosure of potentially Background/ aggressive “cross border” tax planning arrangements information on arrangements that purport to Purpose circumvent CRS and offshore structures that (broader than OECD MDR on CRS). disguise the Beneficial owners of offshore assets. • Work in tandem with CRS to identify taxpayers who do not declare assets and income • Intermediaries or (taxpayers) to identify and • EU based intermediaries or (taxpayers) are required to Key Points report to local tax authorities avoidance disclose and report to the local tax authorities arrangements or Opaque offshore structures potentially aggressive tax planning arrangements that that meet certain “hallmarks”. meet certain “hallmarks”. • • If no intermediary, reporting obligation falls to the If no intermediary, reporting obligation falls to the taxpayer taxpayer • Exchange of information between • Local Tax authorities will exchange information with jurisdictions other EU Tax authorities. • Potential retrospective review and • Local penalties applied for non-compliance disclosures required back to 29 October 2014 • Penalties for non-compliance. • Reporting required 30 days of the • Reporting required within 30 days of the cross border Timing arrangements being made available or “relevant arrangement or structure is available or “relevant services” are provided. services” are provided • Member States to implement Directive by 31December 2019, with 1 July 2020 start date • first exchanges by Tax authorities by 31 October 2020 irishfunds.ie
AEOI Regulatory and Technical update OECD MDR EU DAC 6 • Definition of ‘Intermediary’ and ‘ Relevant • Definition of Intermediary very broad could include Open points / Services’ are very broad and includes fund promoters and other service providers to fund Specific ‘administration and compliance services’. products). considerations • Alternative Funds likely to be considered • EU DAC 6 targets aggressive cross border “Opaque Offshore Structures” and in-scope arrangements but no clear definition of the term arrangement. • Will all OECD MDR requirements be • How will DAC 6 will be transmitted into local transmitted into DAC 6? legislation? • Additional information required on retrospective review requirements Common Considerations • Many legitimate financial transactions (such as transfers to non-CRS Jurisdictions) and legitimate changes of beneficial ownership could be in scope • Financial institutions likely to over-report due to subjective nature of rules/definitions. • Local guidance will be required irishfunds.ie
AEOI Regulatory and Technical update OECD consultation on misuse of residence by Investment schemes to circumvent CRS . • OECD introducing new anti-avoidance rules to target individuals using fictional residencies they have obtained from a jurisdiction through investment in the jurisdictions to avoid CRS • OECD and have identified a set of rules to apply to these jurisdictions such as (No physical presence is required to obtain a residence permit or such presence is not controlled, etc.) and are compiling a list of in-scope jurisdictions . Impact on Funds implementing CRS Due-diligence rules • Potential enhancements to CRS due diligence to identify residence by Investment schemes. AML Updates impacting AEOI Due-Diligence • 4AMLD Ireland-Currently awaiting the updated final 4AMLD regulations to be published. Funds need to consider any changes in line with FATCA/CRS Due diligence obligations. • 5AMLD – The EU Parliament passed changes on 19 April clearing the way for the directive to be implemented. Proposals also include; permitting public sharing of Beneficial Ownership data on Corporations and for those with a “Legitimate interest” for Trusts”, enhanced customer Due diligence on virtual currencies, virtual currency exchange platforms and custodian wallet providers. • Other jurisdictions : Luxembourg has updated its legislation for 4AMLD, and there have also been updates in AML legislation in Cayman, the UK and Hong Kong which will impact on CRS Due-diligence. irishfunds.ie
AEOI Regulatory and Technical update GDPR and the impact on FATCA/CRS GDPR FATCA and CRS New legislation introduced by Finance Act 2017 governs Revenue’s processing of taxpayer GDPR requires that both the fund (as data information and taxpayer’s rights in relation to such controller) and administrator (as data processor) to consider and document on what processing. This legislation is contained in section basis they are processing personal data, 851B of the Taxes Consolidation Act 1997 and provides that Revenue’s processing of taxpayer including data gathered and held for FATCA/CRS. information has a legal basis that is compatible with GDPR An inventory of all personal data must be Reminder of “Wider Approach” to CRS Due created under GDPR (which would include that Diligence where all Investors required to provide a information gathered for FATCA/CRS Self-Certification and TIN at the time of account purposes) See DPC website for more detail on opening (See Revenue CRS FAQ) what should be included in the inventory. GDPR provides an opportunity to develop an Irish Funds Industry Standard Self-Certs include organised and strategic approach to collecting Data protection wording and Customer Information and maintaining investor data notices irishfunds.ie
AEOI Regulatory and Technical update OECD Handbook second edition-Key updates • The OECD Handbook second edition released on 8 April 2018, introduces a new section covering effective implementation of CRS and provides a framework to assist Tax Administrations with enforcing compliance by Financial Institutions with CRS due-diligence and reporting obligations. • Prevent circumvention of CRS by introducing anti- Emphasis on abuse provisions such as MDR, • Requiring FI’s to keep detailed records, and effective implementation procedures to comply with CRS • Effective enforcement including penalties • Effective communication with FIs • Risk-assessment of policies, procedures and IT Promoting and Systems of FI’s Reviewing CRS • Identifying Risk of non- compliance by FI’s compliance by • Establishing a list of in scope Reporting Fi's Reporting FI’s • Pre-requisite compliance in relation to AML/KYC obligations. • Review of internal controls framework maintained by the FI including AML/KYC processes Compliance Review • Review sample accounts Process • Combined methodologies for multi-phase compliance review irishfunds.ie
AEOI Regulatory and Technical update OECD Handbook second edition-Key updates • Oversight of the due diligence and reporting requirements. • Written policies and procedures for CRS DD including compliance with AML/KYC. • Adequate training and monitoring programs for CRS compliance. Review methodologies- • Maintenance of sufficient systems for due Examples of Internal diligence, record keeping and reporting controls • Periodic, independent, risk-based testing of controls • Spot check approach – sampling process • Documentation quality and retention • Importance of transmitting the data and appropriate information disposal policies. Importance of Data • Confidentiality and data safeguard standards in Quality place prior to receiving CRS information. irishfunds.ie
Exchange of Information Branch 2018 AEOI Update Deirdre Free
DAC6 • Requires Intermediaries to report details of Cross-border Arrangements that include at least one indicator which are known as 'Hallmarks‘ • Annex I, Category D - DAC2 Avoidance and Beneficial Ownership • Generic Hallmark and Specific Hallmarks
DAC6 Current state of play and key dates • 31 December 2019 - transposition • 1 July 2020 - application • 31 October 2020 - first exchanges • Reporting obligation includes arrangements, the first step of which was implemented after the Directive enters into force • Report by 31 August 2020
DAC6 Implementation in Ireland • Finance Bill 2019 • Primary legislation and regulations • Electronic filing solution • Further information - EUR -LEX website • https://eur-lex.europa.eu/legal- content/EN/TXT/?uri=consil:ST_6804_2018_INIT
OECD MDR
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