In this white paper, we highlight the key differences between CRS and FATCA, and discuss the impact of CRS on financial institutions (FIs) and their existing processes and systems, while proposing next steps for ensuring CRS compliance.
Salient Features of the Common Reporting Standard (CRS)
The information required to be reported under CRS includes name, account number, residence address, date of birth of individuals, account balance, tax payer identification number, gross amounts paid to the account in a year, and total gross proceeds paid or credited to the account. It is to be exchanged within nine months from the end of the calendar year by the authorities of respective jurisdictions.
Due diligence processes differentiate new accounts from pre-existing accounts, as well as accounts held by individuals from the ones that are held by entities. CRS does not have withholding requirements and focuses on establishing reporting obligations for the financial institutions. To identify reportable accounts, financial institutions need to run the indicia check for any of the following:
- Identification of the account holder as a resident of a reportable jurisdiction
- Current mailing or residence address (including a post office box) in a reportable jurisdiction
- One or more telephone numbers in a reportable jurisdiction and no telephone number in the jurisdiction of the reporting financial institution
- Standing instructions (other than with respect to a depository account) to transfer funds to an account maintained in a reportable jurisdiction
- Currently, effective power of attorney or signatory authority granted to a person with an address in a reportable jurisdiction or
- A ’hold mail’ instruction or ’in-care-of’ address in a reportable jurisdiction if the reporting financial institution does not have any other address on file for the account holder
Read more for a comparative study between FATCA and CRS and how CRS impacts financial institutions, their business processes and IT systems.