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Until a few years ago, in many jurisdictions you could open a bank account, start a business, or establish a trust with just a little information. Now the process can take months and involve multiple forms with hundreds of pages. How can financial intermediaries meet these more stringent requirements without alienating their customers?
We are now in the third wave of transparency measures. And with ESG on the rise, there are many more on the horizon. The introduction of FATCA, CRS, DAC6 and UBO registers - to name just a few recent initiatives to ensure tax integrity - has not only increased the amount of information institutions must collect from their customers. As the focus has shifted from "tax evasion" to the more aggressive "tax avoidance" providers often find that the information they need to collect is slightly different from the data they already have. This fact, and the fact that no two views of what "tax integrity" is are the same, creates a potential minefield. Banks and wealth managers must balance doing their due diligence with alienating their clients. Tax and economic risks collide.
In this article from PwC's Wealth Management Insights series, we explore how financial services firms can meet their due diligence obligations to their clients and manage the tax risks associated with their client base - without creating an environment in which it is difficult to maintain a relationship that is satisfactory to the client and manageable for the institution.
Are you looking for ways to get the most out of your customer relationships - and maintain them by understanding them even better?
Clarity: Clear and consistent articulation of the organisation’s “customer tax risk” appetite
Responsibility: Regular risk assessments, along with clearly defined roles and responsibilities within the organisation, to ensure a consistent approach
Empowerment: Streamlined, digitally powered decisionmaking processes and empowered staff to assess risks against clear guidance
Products: A sophisticated and regularly reviewed product offering
Technology: Robust technology-enabled transaction monitoring
People: Well-informed, well-trained customer advisors who understand their clients well
Defences: Strong and knowledgeable second line of defence, with outside support to address market-specific risks when needed
Process: A clear process for external disclosures to make sure data isn’t shared unnecessarily
If you meet all of the above requirements, you'll have a unique selling point in the market when it comes to attracting customers. You also have vast amounts of data that you can use to improve tax reporting for your clients, offer appropriate products tailored to your clients' tax situations, and enable your account managers to have more detailed and fruitful conversations with their clients
To learn more about how, when it comes to their tax matters, you must not only know your clients, but truly understand them, read the Deep Dive paper and/or contact us.
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Lisa Cornwell
Partner, Private Clients & Family Offices - International, PwC Switzerland
Tel: +41 58 792 25 93