Commonly known as the Common Reporting Standard (CRS), the global standard for automatic exchange of financial account information was developed by the Organisation for Economic Co-operation and Development (OECD) alongside G20 countries and in close cooperation with the EU and will come into effect in stages, beginning 1 January 2016 for early adopters. Under CRS, jurisdictions obtain financial information from local financial institutions and automatically exchange that information with other countries on an annual basis. Early adopters will exchange their first information by the end of September 2017 or September 2018 depending on when the financial institutions identify their reportable accounts.
The CRS has commonality with some EU directives and conventions, yet draws most heavily on the US’s Foreign Account Tax Compliance Act (FATCA) in a broader, more global sense. The standard consists of three components:
- The CRS, which contains the reporting and due diligence rules;
- The Model Competent Authority Agreement (Model CAA), which contains the detailed rules on the exchange of information, and;
- The OECD Commentaries, which provides additional guidance on local implementation of the CAA and CRS. 97 countries have so far signaled their intention to adopt the legislation with 58 of these formally committing to be early adopters in January 2016.
Under the CRS, Financial Institutions (FIs), including Investment Firms, domiciled in countries that implement CRS (e.g., in Cyprus) are required to collect and review information from their clients in order to determine their tax residence. This information will need to be reported to the local tax department where at a later stage the information with be exchanged with other foreign tax authorities of the countries of tax residence of each client who holds an account, provided that they are residents of countries that also implement CRS.
The document containing the global standard for automatic exchange of financial account information sets out in Part I the introduction to the standard and in Part II the text of the Model Competent Authority Agreement (CAA) and the Common Reporting and Due Diligence Standard (CRS).
If you have yet to comply with the applicable specifics, MAP S.Platis, as a market leader in the field of CIFs’ compliance support and consulting, can assist you in assessing your group or company’s status and updating your company’s due diligence procedures. Additionally, MAP S.Platis, via its affiliated regulatory reporting technology provider, MAP FinTech, can offer Financial Institutions a fully automated service called “MAP-CRS” that helps Financial Institutions file their annual reports automatically.
Our multidisciplinary team can provide comprehensive and holistic solutions tailored to each client’s individual needs for a smooth CRS implementation. These include:
- Analysis of CRS’ impact on your business and its operations;
- Development of an action plan for compliance;
- Assistance in the implementation of internal CRS required procedures;
- CRS reporting;
- Providing support on CRS future requirements and developments, and;
- Training and education.
For more information, please feel free to contact us