The portal that the Internal Revenue Service has just opened for financial institutions to use for registering under the Foreign Account Tax Compliance Act is only the latest component that the IRS has rolled out ever so slowly to prepare banks and U.S. taxpayers abroad for the controversial FATCA provisions.

FATCA, which was included as part of the HIRE Act of 2010, requires foreign financial institutions, including hedge funds, to report on the holdings of U.S. taxpayers to the IRS, or else face stiff penalties. On Monday, the IRS unveiled the online registration system that financial institutions will be using for FATCA (see IRS Opens FATCA Registration Portal). But the Treasury Department is still delaying some important FATCA requirements until next July as it tries to persuade more foreign governments to sign agreements with the U.S. for mutual exchange of information (see Treasury Delays FATCA Withholding Requirement). The delay in FATCA requirements may ease some of the pressure on financial firms for now, but the new portal also serves as a reminder that FATCA is not being held up completely, despite opposition both in the U.S. and abroad.

Alan Paris, a principal in the New York office of eClerx, a business process outsourcing firm that handles compliance with FATCA and other laws and regulations for financial services firms and other types of companies, believes the portal is overdue.

“My take is that it’s about time,” he said Tuesday. “If they had this out a year and a half ago or so when they had the original deadline, it would have made things easier for everybody. In terms of whether people will use it, probably people will feel compelled to use it. But there are other things out there. People have to get their house in order. My perspective is that the portal has been a long time coming and is just one piece of the puzzle. Firms have had over two years now to work through the policies and procedures and start to get their house in order to be compliant with FATCA.”

Paris pointed out that FATCA is only one of a number of recent laws and regulations that financial services firms and banks have needed to deal with in recent years in both the U.S. and Europe.

“There’s a veritable blizzard of regulatory compliance requirements that our colleagues in financial services are facing,” he said. “It’s not just FATCA, it’s cost basis, it’s the Dodd-Frank rules, it’s EMIR [European Market Infrastructure Regulation], it’s MIFID [Markets in Financial Instruments Directive in the European Union], and a variety of other requirements from other regulatory bodies. These things don’t stand alone. When firms look at implementing FATCA, they look at it within the context of all the other regulatory and compliance requirements they have, and they look at it in terms of how they can get the most bang for the buck for their effort in terms of organizing themselves around a regulatory and compliance program.”

Paris noted that many of the larger firms his company works with have dedicated dozens of people full time to compliance with FATCA, cost basis and other programs. “That’s just from a project management approach,” he added. “There are hundreds of people who are involved in stripping the documents, digitizing the documents, creating databases, testing for compliance, testing that the things work, modifying the client onboarding systems, implementing client onboarding systems so that the FATCA information, the cost basis information, the client information, the settlement instructions, the domicile information, all gets captured correctly, because it’s all part of the same nod. When you onboard a client, you have to get their tax information and their domicile information. You have to evaluate their suitability for trading. You need all of their KYC [Know Your Customer requirements from the Patriot Act] information. You need to prove it out. You need to get their credit information and so forth.”

Despite those headaches, the new FATCA portal may prove to be helpful for facilitating the process for the banks. “It’s a step in the right direction, but it’s not the be all and end all,” said Paris. “It’s not a closed loop solution. There’s a lot of hard work. We’re processing thousands and thousands of documents a month for our clients, including 8,000 to 10,000 tax forms. In addition to that, when it comes to KYC, there could be hundreds of documents. All of this has to be retained and accessible in a digital form by clients, by the companies and by the financial institutions so that they can report accurately.”

The repeated delays in FATCA have been a mixed blessing for financial firms. “Firms have been spending the past two and a half years interpreting the policies so that they could develop procedures and implement a process whereby they can gather, track and report on this information,” said Paris. “The firms that have been fast to the start have made investments to get all these things up and running, so to have to maintain teams for an extra year or an extra six months is expensive. For the firms that have actually started doing the work, it’s not a question of having more time. It’s a question of six months’ more expense for them. The firms that have been slow to start, they have extra time, but by the same token they still have to get their house in order. The thing that’s being delayed is all the onboarding of the new FATCA requirements and information for new clients. The big issue happens three to six months after that requirement goes into force. It’s the backlog of information that firms have to deal with. It’s finding all the paper documents, electronic documents, faxes, everybody that they’ve done trading with. And if they haven’t maintained that information properly, it all has to be reconstructed and put into a digitally usable form.”