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No rest for the compliant. So soon as one task ends for Swiss Financial Institutions (FIs), a new one rises up in its place. This hydra-headed regime for account reporting began with FATCA classification and registration in 2014, followed by due diligence and first reporting in 2015 and 2016 and then the same cycle again for OECD CRS in 2017, 2018 and 2019. The current year will be unforgettable for so many reasons, one of which is the emergence of a fully-fledged FATCA and CRS enforcement regime. Elements of this regime are varied, ranging from the issuance of FATCA group administrative requests to the evolution of the OECD’s Model Mandatory Disclosure Rules (MDRs) into the EU’s DAC6 and beyond. Swiss FIs though will endure one more burden that arrives in earnest this year: Statutory CRS audits.
Many outstanding questions remain about the shape and scope of the statutory CRS audits in Switzerland, especially as applied to trust companies, single family offices and other specialized operations. In light of this uncertainty, the Swiss Federal Tax Administration (SFTA) and at least one major audit firm orchestrated some pilot programs for late 2018 and 2019 in order to explore these questions in advance of the full-throated audit process set to begin in fall 2020. I advised and consulted with several large Swiss FIs, including leading trust companies, undergoing such CRS test audits. Below please find some of the key lessons learned.
Written materials are essential
The auditor is expert
On-site data must be accessible
The interviews will test the compliance methodology
The Swiss CRS audits will be a long, arduous journey for the SFTA. Despite impressive efforts to train staff and assemble audit teams, the sheer number of Swiss FIs necessitate a multi-year process. Further, whether you are a one-client Treuhand or a global banking behemoth, no Swiss FI knows when its time will might come or how much notice it will have to prepare itself for the audit. So far, the SFTA has notified the audited FIs well in advance, but that may easily shift once the audit program starts rolling. As such, the final item of MTL advice in this blog is this: Get started promptly in order to control the tempo of the process, rather than wait for the call from the auditors and subject yourself to their timeline.
For further support on the subject of Switzerland’s CRS audits, please email: email@example.com
For A CRS Compliance Program for Fiduciaries (Swiss Edition)–and other materials critical to your CRS and FATCA compliance needs–please visit the CRS & FATCA General Store. Please see below for further information about our Swiss CRS Compliance Program.
A CRS Compliance Program for Fiduciaries (Swiss Edition)