Trupti Mehta - Director, Setup & Expansion, GCC Region, Nexdigm set the tone of the webinar by highlighting the importance of compliance with the latest regulations and how complicated laws can be managed by financial institutions if the understanding of said laws is made imperative.
After the brief introduction, Mihir Shah - Practicing Chartered Accountant, began his segment by explaining what is meant by the term Foreign Account Tax Compliance Act (FATCA) and the reasons behind the implementation of this act. He talks about how FATCA inspired the G20 Organization for Economic Co-operation and Development (OECD) to have a regulation that urges countries to have treaties and a proper mechanism in place for exchanging information. This led to the launch of the Common Reporting Standard (CRS) regulation.
The webinar further covers the overall framework of the FATCA/CRS and talks about the authorities involved to whom this regulation is applicable and not applicable, with examples and exceptions. The session discusses the various types of financial institutions highlighted in the rules and their nitty gritty. It explains what classifies a Custodial Institution, Depository Institution, Investment Entity, and a Specified Insurance Company.
The webinar touches upon Reportable Financial Institutions (RFI) and Non-Reportable Financial Institutions (NFRI) with an in-depth into who the Reportable Account Holders are and who classifies as a Passive Non-Financial Foreign Entity (Passive NFFE). With several detailed examples, Mihir talks about the due diligence procedures for pre-existing individual accounts, what classifies as a pre-existing account, what goes into the due diligence for onboarding new accounts, and what classifies as a new account. He also talks about the importance of having proper systems by exercising timely due diligence to help entities identify which accounts are to be reported. Along with individual accounts, Mihir also gets into the due diligence procedures and classifications of pre-existing and new entity accounts.
In this session, the next thing discussed after due diligence requirements is the common errors that institutions must be mindful of while conducting due diligence.
Furthermore, the session dives into the Reporting Portal launched by the Ministry of Finance. It addresses questions regarding what the reporting portal exactly is, what it will be used for, and why it is needed in the first place. It then talks about how this reporting portal functions, the steps one needs to take to register themselves, and what documents will be required.
For the last segment of the webinar, Mihir sheds light on CRS Risk Assessment with a brief historical background, the steps in the risk assessment procedure, the categorization and qualification of the different risk level entities, and the timelines for FATCA/CRS.
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