Do you understand your customer enough to advocate for their tax integrity?

Wealth management deep dive IV

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?

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What are the key ingredients when it comes to managing customer tax integrity risks?

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

The best possible outcome for everyone? With tax integrity risks, “KYC” needs to become “UYC”.

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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The New Equation

PwC's Wealth Management Insights Report 2022

Read the full report


Contact us

Lisa Cornwell

Lisa Cornwell

Partner, Private Clients & Family Offices - International, PwC Switzerland

Tel: +41 58 792 25 93

Martin Büeler

Martin Büeler

Partner, Leiter FS Tax, PwC Switzerland

Tel: +41 58 792 43 92

Patrick Akiki

Patrick Akiki

Partner, Financial Services Market Lead, PwC Switzerland

Tel: +41 58 792 25 19