DAC8 Gap Analysis: Identifying Compliance Deficiencies

Following the readiness assessment, a detailed gap analysis provides the foundation for your DAC8 implementation plan. This article explains how to conduct a rigorous gap analysis that translates into actionable project plans.

From Assessment to Analysis

While the readiness assessment provides a high-level view of compliance gaps, the gap analysis goes deeper. For each identified gap, the analysis must determine the exact nature of the deficiency, the root cause (process, technology, data, or organizational), the effort required to close the gap, dependencies on other workstreams or systems, and the risk if the gap is not addressed by the reporting deadline.

Common Gap Categories

Based on industry experience, the most common DAC8 gaps fall into several categories:

Data gaps. Missing TIN collection for certain jurisdictions. Incomplete self-certification processes. No capture of fair market values at transaction time. Inconsistent user identification data across systems.

Technology gaps. No XML generation capability in the DAC8/CARF format. Lack of TIN validation logic for multiple jurisdictions. Insufficient transaction classification and aggregation tools. No automated correction and resubmission workflow.

Process gaps. No documented due diligence procedures. No look-back process for existing users. No defined workflow for annual report compilation and submission. No quality assurance procedures for DAC8 data and reports.

Organizational gaps. No designated DAC8 compliance owner. Insufficient staff training. No budget allocation for DAC8 implementation. Lack of management awareness and support.

Prioritization Framework

Not all gaps are equally critical. Prioritize based on regulatory impact (will this gap cause non-compliance?), effort to close (quick wins versus major projects), dependencies (which gaps must be closed before others can be addressed?), and timeline (when must this gap be closed relative to the reporting deadline?).

Conclusion

A thorough gap analysis transforms the readiness assessment into an actionable implementation plan. CASPs that invest in detailed analysis will build more focused and efficient compliance programs.