4. Data Collection and Maintenance
Accurate and comprehensive data capture, storage, and updating are critical for classification, due diligence, and reporting. Key data points include TINs, GIINs, account balances, full holder details, and entity classifications.

• Fund’s management team need systems capable of: Periodic data reviews, flagging incomplete/invalid information, and securely updating records.
• Leverage Technology: Utilizing integrated systems or specialized tools can significantly reduce manual errors in data handling.

5. Reporting Obligations
In the event reporting is required to be submit, the Fund’s management team must submit annual reports containing specified information about reportable accounts.

• FATCA Reporting: For jurisdictions under a Model 2 IGA, such as Hong Kong, reporting is submitted directly to the IRS, but financial institutions must also register with the IRD. For Model 1 IGA jurisdictions, such as Cayman Islands and BVI, FATCA reports are submitted to the local tax authority—the DITC in Cayman and the ITA in BVI—which then transmits the data to the IRS.
• CRS Reporting: To the local tax authority for international exchange which then transmits data via the OECD’s CTS via the OECD's Common Transmission System (CTS).
• Critical: Reports must adhere to the precise FATCA and CRS XML schemas. Format errors risk rejection and penalties. Retain copies of reports and submission confirmations.

6. Documentation and Record Keeping
Maintain thorough, standardized documentation as evidence of compliance, crucial for audits or reviews.

• Essential Records: Self-certification forms, entity classification evidence, due diligence review documentation, FATCA/CRS reports, submission confirmations.
• Data Security: Implement encryption, role-based access controls, and audit logs.
• Retention Periods: Typically 5-7 years minimum, but fund’s management team must verify and comply with specific requirements in each relevant jurisdiction.

7. Policies and Procedures
Establish clear, written internal policies and procedures covering all aspects of FATCA/CRS compliance: classification, onboarding/due diligence, data management, reporting, and record keeping.

• Ensure policies align with OECD, IRS, and local tax authority requirements.
• Clearly assign roles and responsibilities for each compliance task.
• Implement a process to monitor for regulatory updates and promptly revise procedures accordingly.

8. Staff Training and Awareness
Effective compliance depends on knowledgeable staff. Provide role-specific training on FATCA/CRS requirements and internal procedures for relevant teams (compliance, operations, investor relations, IT).

• Conduct regular refresher training (e.g., annually, after regulatory changes, post-audit findings).
• Use practical examples (case studies, simulations) to enhance understanding.
• Maintain training logs as proof of ongoing competency development.

9. Audit and Internal Reviews
Regular internal reviews are vital to verify implementation effectiveness, identify gaps, and strengthen the compliance framework. They provide crucial documentation if regulators inquire.

• Conduct periodic reviews (e.g., annually or semi-annually, some FI may subject to annual attestation or certification of compliance).
• Consider involving independent internal auditors or external specialists for objectivity.
• Document findings, errors, and gaps meticulously. Implement corrective actions (e.g., procedure updates, retraining, system fixes, restatements).
• Retain a complete audit trail of reviews and remediation actions.

10. Leverage Technology for Efficiency and Accuracy
Manual processes are prone to error, delay, and oversight. Fund’s management team should evaluate and utilize appropriate technology solutions to enhance the efficiency, accuracy, and auditability of their FATCA/CRS compliance cycle.

• Technology can support: Classification validation, self-certification management, secure data/document handling, automated report generation (XML), and staying updated on regulatory changes.
• Integration: Where possible, integrate FATCA/CRS systems with core fund systems (e.g., KYC, investor registry, accounting) to ensure data consistency and streamline workflows.

Maintaining Vigilance in FATCA and CRS Compliance

FATCA and CRS compliance is an ongoing, dynamic requirement for fund’s management team with international investors. Success demands continuous vigilance, cross-functional collaboration, and a commitment to process improvement. By proactively implementing and regularly refining a structured compliance program based on these steps, fund’s management team can effectively manage regulatory risk and uphold their obligations for tax transparency.

Fund’s management team are encouraged to seek expert guidance to ensure their specific compliance framework is robust and adapts to the evolving regulatory landscape due to the fact that reporting financial institute remain fully liable for compliance, even when delegating.

Disclaimer:

This guide is shared for informational purposes only and reflects general operational practices for FATCA and CRS compliance across Hong Kong, BVI, and Cayman Islands. It does not constitute legal, tax, or regulatory advice. While every effort has been made to ensure accuracy, readers should consult their own advisors or relevant authorities for jurisdiction-specific guidance.

The fund’s management team retains full responsibility for compliance decisions and reporting obligations. We’re pleased to share this resource to support industry dialogue and best practices—feel free to repost or reference with attribution.