A European business, Swissrisk, has launched a data-search system for financial institutions that need to know they can comply with onerous new US tax compliance laws known as FATCA.

Swissrisk, a company owned by Dion Global Solutions, the India-listed international technology group, has rolled out “FATCA Gateway”. (FATCA stands for Foreign Account Tax Compliance Act, passed in March 2010). The act is designed to prevent expat US citizens – estimated by some to be numbered more than 7 million – to evade US tax reporting rules. Already, a number of firms have told this publication they do not handle US clients as they are too expensive to serve as a result of FATCA.

The rules stipulate that “foreign financial institutions” – a term covering not just banks but entities such as hedge funds – must establish if any of their clients hold US nationality. If firms fail to set up systems to comply, they will incur a 30 per cent withholding tax.

The FATCA legislation has already prompted some firms to cater to individuals who may find it difficult to get access to financial services. (To view one such example, click here).

Swissrisk

According to Swissrisk’s own product release, “FATCA Gateway enables the extraction and management of key data from internal and external systems in order to facilitate timely and accurate FATCA reporting as well as notification advices to clients”.

“Initial notices from the IRS proposed radical and far-reaching reforms to the US tax reporting process placing extreme demands upon the organizations deemed to have to comply. Although recent indications suggest a more moderate implementation approach over a longer timeframe, there is a definite need now for financial institutions to deploy a solution such as FATCA Gateway that can take the burden of FATCA reporting away from their core systems,” said Clive Assender, product manager at Swissrisk Financial Systems.