Bill 7527 passed the Luxembourg Parliament and modifies the Common Reporting Standard and FATCA Law
The Ordinance, which will come into force on January 01, 2021, calls all reporting financial institutions based in Luxembourg
to keep records on all due diligence activities executed and evidence used for ten years beginning at the end of the calendar year in which the due diligences activities took place;
to put in place policies, controls, procedures and IT systems to fulfil their AML/KYC, client due diligence and fiscal reporting obligations;
to grant - on request of the tax authorities - access to the due diligence audit logs, policies controls, procedures and IT systems the financial institution has in place;
The ordinance increases the existing penalties for late filing of #CRS and #FATCA returns to EUR 10’000 and introduce penalties on incorrect amounts reported on reportable financial accounts. The fine on incorrect reported amounts may be an increased amount of 0.5% on the amounts that were due to report.
Reporting financial institutions should be aware, that they may be liable for a maximum fine of EUR 250’000 if it turns out, following an audit executed by the tax authorities, that it fails to comply with its obligations under the CRS and FATCA law.
The authors observation
With the amendments Luxembourg
strengthening his activities to combat tax evasion through the use off-shore accounts: and
puts additional burden on financial institutions to comply with the CRS and FATCA requirements.
Financial institutions are encouraged to assess their current CRS and FATCA operating model and to integrate IT solutions like CRS/FATCA OneTM from Trans World Compliance Inc. supporting financial institutions AML/KYC, remediation and reporting obligations under FATCA and CRS to mitigate their legal risks through in-adequate AML/KYC and fiscal reporting procedures.
About the author
Marco is a Banker, MBA (finance and accounting) and LLM (international business and tax law) with 30+ years experiences as internal auditor, business consultant, project manager and in-house legal and tax counsel gained with the operations and tax compliance environment of leading Private Banking Institutes, Wealth Management Organisations and Central Securities Depository and Clearing houses located in Europe and the APAC Region.
Marco is focused on advisory services and project management in the field of
AEoI, FATCA, EU-DAC6, OECD-CRS;
U.S Qualified intermediary regime (QI);
Withholding Tax on Capital gains and Investment Income
Securities transaction tax (stamp tax); and
Austrian, German, Hong Kong, Swiss and U.S. International Tax Law