This blog was last updated on June 27, 2021
Technology professionals at financial institutions are confident that their first U.K. Common Reporting Standard (CRS) submissions will go fairly well, but anxiety about a few issues persists.
A poll conducted by Sovos amongst readers of ‘Banking Technology’ in the run up to the U.K.’s first CRS submission found respondents to be largely optimistic about the prospects for their first transmittals. Respondents expected strong support from their IT departments and were largely pleased by the quality of information delivered by HMRC and OECD. However, some concerns remained, primarily surrounding difficulty in pulling data from internal systems and challenges in fulfilling compliance obligations.
Sovos carried out the survey during May in conjunction with ‘Banking Technology’, one of the U.K.’s leading IT publications, immediately prior to financial institutions making their first CRS transmittal. The title reaches 70,000 financial technology decision makers worldwide and covers all aspects of financial technology relevant to banks and other financial institutions.
Reflecting the publication’s readership profile, those responding to the survey worked for a variety of financial institutions, including commercial, investment and retail banks, as well as asset managers and trusts. Respondents were drawn equally from Compliance and IT departments.
Some key points emerged from the survey:
The majority of transmittals will be accurate (or will they?)
About 75 per cent of respondents predicted that the level of inaccurate filings would be in the ranges of either 0 per cent, 1-9 per cent or 11-20 per cent. However, some were less optimistic and said that the level of inaccuracy could climb to as high as 51-60 per cent —the level of inaccuracy that Sovos has predicted. (See the blog post: ‘60% Of Filings Submitted to ‘Early Adopter’ Tax Jurisdictions for First CRS Exchange May Be Rejected’.).
One transmittal should be enough
About 60 per cent of respondents thought they would only need to transmit their data once, although some predicted it could take up to three attempts before it was delivered successfully.
HMRC and OECD get top marks …
Respondents said that both the U.K.’s regulator, HMRC, and the OECD had done well to communicate with financial institutions in the run-up to the submission. Most respondents thought HMRC had provided either ‘good’ or ‘very good’ levels of support, and most rated the level of information provided by OECD as being either ‘good’ or ‘very good’.
… As do IT departments
Most respondents thought their IT departments would provide their Compliance Departments with either ‘some support’ or ‘a lot of support’ with the first transmittal. Thankfully, none replied ‘no support at all’, and only a small minority thought IT would offer ‘a limited amount of support.’
Banks face five big challenges
Respondents identified their two biggest challenges as ‘the ability to pull data from internal systems’ and ‘keeping up with compliance changes that impact the reportable accounts and/or the final XML transmittal’.
Following those concerns, in descending order of importance, were a ‘lack of clarity of guidelines from local regulators’, the ‘ability to transform data into a meaningful transmittal’, the ‘increase in value of reportable accounts’ and finally ‘transmitting the file to the local regulator’.
Automation could be the answer, but board support is critical
The majority of respondents said their organisations were currently planning to centralise and automate their compliance procedures. Among those who offered that response, most confirmed that the decision was an initiative led by their companies’ boards of directors, demonstrating the high priority level CRS compliance has in financial institutions.
Commenting on the survey results, Scott Freedman, Director, Product Strategy for Sovos, said, “Although most respondents seemed confident in their ability to handle their first U.K. CRS filing, their survey answers illustrated a large gravitas towards centralising and automating compliance procedures with support from the highest levels. We expect financial institutions that are not able to keep up with the ever-changing regulatory environment to face substantial, and possibly financially damaging, problems in complying with the new standard. Those that are prepared will have a significant advantage.”
Take Action
Download an infographic containing the survey results here.
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