From the May 2014 Special Report issue of Treasury & Risk magazine

Facing Regulatory Headwinds: How Cash Management May be Effected by Worldwide Rule Changes

In today’s dynamic global economy, treasurers are increasingly focused on financial risk.  A Citi Treasury Diagnostic survey revealed that 83% of respondents have put a treasury policy in place to cover liquidity risk and 79% have a policy to cover counterparty and credit risk.  When asked how often they assess their liquidity and funding risk, 70% of those surveyed indicated that they review risk at least quarterly.  It is considered best practice to have a comprehensive policy in place that is reviewed on a regular basis, putting the company in a strong position to deal with the implications of regulatory headwinds.

Over the past few years, regulators and governments throughout the world have been introducing new regulations with the goal of shoring up the global financial system.  Regulations, such as Basel III, FATCA and SEPA, are changing the way banks do business, and in so doing, are impacting multinationals that do business with them. 

FATCA: Expanded bank responsibility for U.S. information reporting on U.S. accounts

Beginning on July 1, 2014, the Foreign Account Tax Compliance Act (FATCA) will require all U.S. and foreign financial institutions (FFI) to report information on their U.S. account holders and substantial U.S. owners of certain Non-Financial Foreign Entities (NFFE) directly or indirectly to the Internal Revenue Service (IRS).  This regulation is designed to make it more difficult for U.S. taxpayers to conceal assets held in offshore accounts or in offshore legal entities.

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