FATCA and CRS Global Reporting

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The Foreign Account Tax Compliance Act (FATCA) is a U.S. legislation which aims to combat tax evasion by U.S. persons by requiring Foreign Financial Institutions i.e. non-U.S. financial institutions to identify and report any U.S. persons that hold assets outside the USA to the Internal Revenue Service (IRS).

Following on from FATCA, the Organization for Economic Cooperation and Development (OECD) has formed an initiative for global tax transparency known as the Common Reporting Standard (CRS). The CRS is a broad reporting regime that draws extensively on the intergovernmental approach to the implementation of FATCA. Similar to FATCA, the CRS requires all financial institutions resident in a participating jurisdiction to identify and report any accounts for persons tax resident in a CRS participating jurisdiction.

KCG experts on subject-matter empowers its’ clients with the right advisory to report annually on FATCA and CRS and remain compliant with global tax reporting requirements, due to the potential commercial, reputational and financial risks (e.g. tax withholding and regulatory penalties) of non-compliance.

 ESG stands for “Environmental, Social, and Governance”, three important factors that companies consider in their business strategy and investments:

- ‘Environmental’ considers the companies’ impact on the environment, through their carbon footprint, use of renewable energy, animal testing, compliance with environmental standards, and environmental impact reports.

- ‘Social’ considers how the company impacts upon people through their consultation with the community, treatment of workers, diversity, and protection of consumers.

- ‘Governance’ refers to company leadership, business ethics, corruption, transparency, and executive and employee remuneration.

How will your organization shift from a predominantly reactive engagement with ESG to one of strategic engagement?

A sound grasp of ESG is crucial for effectively managing associated risks and meeting legal obligations. ESG also presents significant opportunities for responsible corporate citizens to strengthen their public image and be at the forefront of sustainable innovation.

While reliable ESG measures are being developed, your organization can start implementing processes to measure ESG-related performance such as carbon emissions, modern slavery risk, and biodiversity.

KCG experts provide their clients with a framework they can employ to develop an ESG strategy built around 5 elements:

1. What is ESG and why a strategy is essential for your business.

2. Scope: Identify what ESG issues your company is going to prioritize.

3. Test: Undertake internal and external stakeholder engagement.

4. Measure: Develop an externally verifiable measuring effectiveness framework and associated reporting metrics to demonstrate ESG performance.

5. Operationalize: Develop policies and operational processes to meet performance objectives.

Financial institutions must use efficient approaches to understand, measure, and manage the financial crimes risks that they face by conducting an enhanced enterprise-wide financial crimes risk assessment that covers Bank Secrecy rules and Anti-Money Laundering (AML) regulations as well as sanctions laws and regulations such as those promulgated by the OFAC. Such enterprise-wide risk assessment is critical to positioning an institution in the best manner possible to meet the challenge of managing and implementing change in accordance with its strategic risk management objectives and supervisory expectations.

KCG experts bring the experience and expertise in current regulations needed to assess, review, enhance, test, and validate financial institutions’ compliance programs through holistic enterprise-wide risk assessments. We provide our clients with a better leverage from their customer and transactional data to build a broad understanding of their risk exposure and measure how effectively their current control environment addresses those risks, allowing them to develop tailored responses to mitigate risk and to better evaluate risk to seize commercial opportunities.

Our assessment covers each of the pillars of an effective compliance program: governance, customer due diligence (CDD) and know your customer (KYC) policies and procedures, internal controls, training, and audit and independent testing. KCG conducts a detailed review of policies and procedures and tests internal systems and controls to identify potential weaknesses and, as appropriate, partners with clients to design and implement corrective actions.

Corruption costs companies millions of dollars each year in lost revenues and penalties. But the true costs and damages to a company from corruption or scandal go well beyond any monetary penalty, to destroy a company’s reputation and image. Many strict anti-bribery and anti-corruption International acts like the U.S. Foreign Corrupt Practices Act (FCPA) and the UK’s Bribery Act, even require companies not only to be responsible for their own behavior but to also be held accountable for failing to prevent bribes from being paid by or to a third party.

KCG’s Financial Crimes Compliance practice assesses the anti-bribery and anti-corruption programs of companies, organizations, and international corporations, helping them make certain that they have the right policies and procedures in place. 

When needed, KCG’s team of former members of law enforcement forensic accountants, and experienced attorneys in corruption issues, also undertakes investigations of breaches to the implemented ABC Program.

Our Methodology focuses on Transparency and Accountability and on financial crimes that have become widely sanctioned in recent years like Tax Evasion.

At KCG we identify the information, we analyze the facts and we mitigate the risks, by providing our clients, their counsel, and other advisors and stakeholders with the relevant and timely information required to make fully informed business and legal decisions necessary to prevail in a complex, international operating environment.

Whether a company faces a regulatory inquiry or a criminal probe, is engaged in a commercial dispute, or is contemplating a cross-border transaction, KCG can provide the necessary and tailored research, intelligence, analysis, and investigative expertise to support the client through the entire process.

We provide critical litigation intelligence in shareholder or other corporate disputes, intellectual property controversies, financial reporting cases, and international asset traces. Our reports can be used in investigations of fraud and internal malfeasance; bribery, corruption, and money laundering investigations; multijurisdictional regulatory inquiries and investigations; complex compliance issues; whistleblower complaints; mergers and acquisitions; corporate control contests; and other factual disputes.

 KCG investigators and business intelligence professionals are engaged for due diligence solutions: critical information that sheds light and enables a more informed decision both on value and on the associated risks. Whether for gaining insight on a prospective investment, acquisition, merger candidate, or market or the vetting of contractors, suppliers, and consultants for possible legal or regulatory breaches, KCG has the right mix of experience and expertise to provide just that. From conducting pre-employment intelligence gathering on key staff or High Net Worth inner circle reputational assessments to reviews of a merger target’s cyber-security status, areas of vulnerability, and threats from within, the need for relevant and comprehensive due diligence solutions that can minimize, anticipate, or avoid enterprise risk is more than ever a crucial component of an institution’s success.

  KCG conducts financial investigations and provides forensic accounting services to assist clients facing actual or potential regulatory scrutiny, litigation, and to meet their compliance goals. Allegations of financial fraud, corruption, and accounting irregularities can lead to loss, regulatory censure, and reputational damage. 

We help our clients learn the facts, minimize damage, and protect their reputation quickly, discreetly, and effectively.

Our diverse team of experts includes certified/chartered forensic accountants, financial analysts, data scientists, software engineers, and former regulators.

 Fraud presents a major threat to all organizations, large and small. Fraudsters exploit vulnerabilities in an organization’s internal controls, systems, and people. In addition to financial losses, fraud can damage reputation; weaken consumer and investor confidence; impact share price and employee morale, and result in costly regulatory investigations from which many organizations fail to fully recover.

The ability to detect and prevent instances of fraud early is vital to avoiding business-critical problems.

KCG helps clients identify and uncover fraudulent activities and schemes, while also assisting with the recovery of losses associated with fraud. 

Our tailored fraud detection analytics provide insight into clients’ most critical data to detect fraud and areas of high risk, including the following:

• Conflicts of interest involving purchasing, sales schemes, and customer collusion
• Bribery, kickbacks, commissions, and illegal gratuities
• Overcharging
• Theft of cash and skimming
• Billing and expense reimbursement schemes
• Fictitious invoices, suppliers, and credit notes
• Ghost employees and payroll fraud
• Inventory and raw material misuse and theft
• Financial statement fraud, including fictitious revenue, timing differences, and concealed liabilities
• Over-reliance on key suppliers and customers