English in Banking blog
A never ending story: Additional delay of Sec. 871(m) implementation and publication of final regulations for Sec. 871(m), QI and FATCA around year end
On 16 December 2019, the IRS published Notice 2020-02 extending the transitional relief with respect to certain requirements under the Sec. 871(m) regime for another two years. This is good news for all financial institutions involved in the issuance, or trade, of financial instruments referencing US stock.
In addition, certain temporary provisions in the Sec. 871(m) regulations were finalised and published in the Federal Register on 17 December 2019. Similarly, final QI and FATCA regulations were published in the Federal Register on 2 January 2020. Overall, the regulations formalized pre-announced updates and there were no surprises.
The latest amendment to the EU’s Directive on Administrative Cooperation (DAC6) requires EU intermediaries (and in some cases relevant EU taxpayers) to report to their domestic tax authorities on potentially aggressive or abusive cross-border tax arrangements (reportable cross-border arrangements or RCBAs). In parallel, certain jurisdictions are implementing the OECD’s mandatory disclosure rules (MDR), which essentially apply to arrangements coming within the hallmark D category of DAC6.
This blog discusses the impact of DAC6 and the OECD MDR on the trust and fiduciary sector and is part of a series designed to help our clients react to the new regulatory requirements.
The transition from interbank offered rates (IBORs) to new alternative risk-free rates (RFRs) marks a historic turning point in financial markets. With cessation of LIBOR expected for the end of 2021, banks and other financial players need to focus on suitable transition planning. Swiss banks have already gained some experience in this regard, with the transition from the Tomorrow/Next Indexed Swaps (TOIS) fixing to the Swiss Average Rate Overnight (SARON); but the replacement of CHF LIBOR will be far more complex due to its importance as the basis for pricing Swiss loans. A large proportion of financial contracts referencing CHF LIBOR has maturity dates beyond 2021, so fallback provisions need to be high on the transition agenda of Swiss banks, to ensure contract continuity.
The fallback framework developed by the International Swaps and Derivatives Association (ISDA), widely adopted by national working groups, has three component elements. The fallback description, including pre-cessation and cessation triggers, needs to be defined; and both term rate and spread adjustments need to be made, as a consequence of structural differences between IBORs and RFRs. While the focus of this blog is on spread adjustments for CHF LIBOR and SARON, the concepts described here can be applied generally to other currencies such as the US dollar.
With the 2009 protocol to the Swiss-US double tax treaty ratified (see our prior blog post), the IRS can submit group requests under FATCA and Swiss Financial Institutions (FIs) should expect to receive, at any time, production orders from the Swiss Federal Tax Administration (SFTA). All affected Swiss FIs should be preparing now to be in a position to respond within the 10-day deadline stipulated in the IGA and the Swiss FATCA Law.
In this blog, we highlight the main issues we have observed in the market, which include areas where unexpected issues can arise or the workload tends to be underestimated.
We believe that Digital Finance Transformation is a critical requirement for the Finance functions in Swiss private and cantonal banks1 in addressing the challenges they face – technology disruption, macroeconomic uncertainty, and increasing competition, as well as continuing high regulatory costs of doing business. Senior management in banks are focusing on efficiency, and as a result Finance functions are under pressure to limit their own costs, help the entire organization to cut costs and deliver effective financial control, and at the same time provide high-quality insights.
Summer vacations are over and temperatures outside are slowly falling to autumn levels. In contrast, the heat is steadily rising for banks, with the Financial Services Act (FinSA/ German: FIDLEG) expected to come into force on 1 January 2020. The Federal Department of Finance (FDF) will ask the Federal Council to bring FIDLEG and the Financial Institutions Act (FinIA/ German: FINIG) - together with the Federal Council's implementing ordinances - into force on that date. A transition period of two years is anticipated (source: SIF). However, some voices are calling for an initial transition period of one year only, which will force banks to return to their initial project timeline.
BREAKING NEWS: Swiss-US double tax treaty protocol ratified and FATCA group requests expected at any time
On 20 September 2019, the final step to bring the 2009 protocol to the Swiss-US double tax treaty into force was executed when government representatives exchanged the instruments of ratification. The protocol is applicable with immediate effect and among other things allows the IRS to make group requests under FATCA concerning non-consenting US accounts and non-consenting NPFFIs.
In this blog, we highlight the top 5 challenges and top 5 tips for a Swiss financial institution (FI) in anticipation of the FATCA group requests.
See our prior blog post to find out what other changes the protocol has brought.
With the summer holidays coming to an end, it is the perfect time to continue or start thinking about how the latest amendment to the EU’s Directive on Administrative Cooperation (“DAC6”) impacts your organisation and initiate the necessary steps to ensure operational readiness in anticipation of the first reporting in summer 2020.
Many people are surprised when they hear that DAC6 affects not only tax advisors, lawyers and financial services providers, but also multinational groups across all industries (even if headquartered in Switzerland). In this blog, which is part of a series, we provide examples of how multinational groups could be involved in reportable arrangements, discuss reporting obligations, and share our views on what should be done next.
In our recent published global paper “Getting Cloud Right – How can banks stay ahead of the curve?” we explained the key components of a successful cloud journey and the major steps that need to be undertaken.
In this blog we give some insights on international regulations that may impact the use of cloud services in Switzerland – the US CLOUD Act and the General Data Protection Regulation (GDPR).