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Outsourcing Your AEOI Compliance: Why and How?

26th Nov 2021

The Automatic Exchange of Information (AEOI) was implemented as a standardised protocol for exchanging tax information that would increase transparency and reduce the impact of global tax evasion. FATCA reporting submissions commenced in 2015, followed by the first Common Reporting Submission (CRS) information exchanges in 2017.

To comply with the requirements, reportable financial institutions had to find significant new technical resource to stay on top of and comply with the new regulatory environment.

AEOI reporting has had a profound impact on financial institutions. It is complex, resource-intensive, requires specialised knowledge and presents a significant risk for non-compliance, which is why many financial institutions have started to look at outsourcing solutions.

At JTC we are seeing increasing numbers of financial institutions looking to outsource their AEOI compliance to us. To explain more about the complexities and how outsourcing can help, we have outlined some practical considerations.

Benefits of outsourcing:

Obligations are efficiently and cost-effectively managed

Complying with FATCA and CRS regulations requires specialised knowledge. Depending on the number of entities for which a financial institution needs to submit reports, a team of experts may need to be recruited at a significant cost. Outsourcing this function provides a financial institution access to the necessary skills in AEOI compliance without the associated training costs and fixed investment in human capital.

An outsourcing partner will have developed operational efficiencies and best practices from their experience of submitting high volumes of FATCA and CRS reports to multiple jurisdictions. These efficient operating models enable them to reduce both costs and compliance risk and can be tailored to your specific requirements.

Reduced compliance risk

By entering into an outsourcing arrangement with an experienced organisation, financial institutions can benefit from both a reduced cost and reduced compliance risk.

Keeping up with the changes

The AEOI compliance landscape is constantly evolving. Regulators are increasingly requesting additional information as their systems evolve, enabling them to conduct sophisticated analyses of the data they receive.

An outsourcing partner will focus on keeping up to date with these changes, providing a financial institution the peace of mind that systems, processes and expertise remain relevant and robust.

Key considerations when outsourcing AEOI compliance

While the benefits of forming an outsourcing partnership with a suitable AEOI service provider are apparent, a few key practical considerations are required:

Data integration

The quality, flow and security of data can make or break an organisation’s ability to comply with AEOI regulations. Timeous and accurate data will determine how account holders are classified, which accounts are reportable and what financial data needs to be included in the FATCA or CRS submission. It’s important to do an overall assessment of the data when establishing an outsourcing arrangement to manage risks associated with invalid or incomplete data. It is equally important to ensure that the IT infrastructure is in place to support the secure sharing of data between financial institutions and their outsourcing partner. Sourcing and cleansing data for reporting is not always easy and can’t always be automated.

Scope of service

The scope of the outsourced service may vary from a complete end-to-end AEOI reporting service to outsourcing certain steps in the reporting process, such as the creation of XML files for submission or entity classification. It is sometimes practical to outsource a few steps in the process at first and then expand the service as the outsourcing relationship matures.

An outsourcing partner should be able to tailor a solution based on the individual needs of a financial institution and be able to put in place the required systems and processes for optimal service delivery. A clear understanding and agreement on service requirements upfront allows for a more accurate scoping of services and makes sure expectations are met.

Timelines for setting up the outsourced service

Sufficient time should be allowed to ensure all necessary preparation is in place for the ‘go-live’ of service delivery. This may include setting up the IT infrastructure, transferring account data to the outsourcing partner or transferring entity registration details on the various tax authorities’ AEOI submission portals. A suitable implementation plan, including targets and milestones, should be designed and signed off allowing the various stakeholders the opportunity to contribute to a successful service launch.


FATCA and CRS reporting is complex, time consuming and constantly evolving. Keeping up with regulations in multiple countries, managing internal resources, lack of adequate software and reporting accurate data in a timely manner are some of the challenges and concerns facing financial institutions. For many, dealing with the issue purely in-house is not a viable option. Finding the right AEOI outsourcing partner can be extremely beneficial to a financial institution; it can reduce risk and increase operational efficiency. These regimes are here to stay, therefore outsourcing this function to an experienced and skilled partner is definitely worth exploring.


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