CRS - Frequently Asked Questions

What is CRS?

To answer the question what is CRS, we first need to understand the CRS meaning. CRS stands for the Common Reporting Standard (CRS). CRS is a global standard developed by the Organisation for Economic Co-operation and Development (OECD) in 2014 for the automatic exchange of financial account information.

The CRS regulation aims to combat tax evasion and protect the integrity of global tax systems. Under the CRS regulation foreign financial institutions (FFIs) in participating countries (referred to as participating jurisdictions) are obligated to identify tax residents or reportable accounts and perform CRS reporting on an annual basis to the local authority.

CRS was advocated by G20 and currently, 121 countries signed up and are committed to complying with the international standard of exchanging information under CRS compliance.
 

Who Is Reportable Under CRS?

The CRS regulations obligate reporting financial institutions (RFIs) to identify the tax residency of their customers or accounts.

Under the CRS compliance rules, RFIs are required to identify all customers who are tax residents outside of their country or jurisdiction, where they hold their accounts or products, and report the required information to the local tax authority. The local tax authority will then exchange that information with the relevant tax authority where the customer is a tax resident.

Why Are You Asking Me For My Jurisdiction(s) of Tax Residency?

Financial Institutions are required to ask existing and new customers for their tax country or jurisdictions for CRS compliance purposes. As part of their CRS reporting RFIs are obligated to collect CRS forms also known as self-certification forms which pertain to certain information relating to the customer or entity's tax statuses. 

Which Industries Are Doing This? Are All Banks Doing This?

CRS meaning a common reporting standard explains that this law is used worldwide and throughout the financial service sector. Most financial institutions within the financial services industry within the participating countries or jurisdictions are required to be compliant with CRS finance laws.

This list of financial institutions with CRS requirements includes traditional banks, digital banks and trading platforms, asset management companies and fund administrators. The OECD has recently proposed that crypto and digital asset exchanges and platforms may also soon be within the scope of CRS.

What Information Are You Asking Customers To Provide & Verify?

Financial institutions need to collect and store the following information and CRS data about their customers and accounts. The crs data collected is dependent on local law requirements of the participating jurisdiction or country where the financial institution resides or operates.

This information is collected through CRS forms, including CRS-I, CRS-E and CRS-CP. The CRS full form will require that the following information is provided and validated. 

• Name

• Address

• Place of birth* (for Individual and Controlling Persons)

• Date of birth*(for Individual and Controlling Persons)

• Country(ies) and jurisdiction(s) of tax residence

• Taxpayer identification number(s)*

• Place of registration/incorporation (for Entities)

• Entity Type (for Entities)

• Controlling Person Type for certain Entity Types (for Controlling Persons)

How Is My Tax Residence Defined?

Each jurisdiction committed to automatically exchanging information under the CRS may define tax residence differently. Tax residence is determined by the domestic law of each jurisdiction or country.

Determining your tax residency may also be dependent on an individual or entity's circumstances. For example, there might be situations where a person qualifies as a tax resident under the tax residence rules of more than one jurisdiction and therefore is a tax resident in more than one jurisdiction.

For purposes of CRS compliance, RFIs must ensure that account holders or controlling persons disclose all tax residencies in their CRS self-certification forms. For more information on the tax residency rules of the participating jurisdictions visit the OECD website.

The Information I Have Been Asked For On The Forms Is Similar To The Information I Have Been Asked For Under FATCA Why Is This Different?

There are similarities between the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS).

Although CRS does use a similar approach of automatically exchanging information to combat tax evasion as the FATCA does, they are technically two different regulations with different requirements.

Therefore even if you have provided similar information to your Financial Institution under FATCA you may still need to provide the same or additional information under CRS.

FATCA is technically a US law which requires foreign financial institutions (FFIs) to identify US persons that hold assets abroad and regularly submit or report this information on these financial accounts in line with the FATCA regulations.

CRS as previously stated above requires RFIs to identify the tax residency of all customers. Under CRS RFIs are then obligated to report information on those customers who are tax residents in countries outside of the country or jurisdiction where their accounts are being held.

I Live In The Same Country/Jurisdiction As I Pay Tax Ao Why Do I Need To Give You These Details?

As mentioned in the previous question RFIs are obligated under CRS policy to establish the tax residency of all customers. However, if they find that you are a tax resident in the same country/jurisdiction as where you hold your account then your information will not be considered CRS data. And thus your information will not be reported to local or international tax authorities for CRS finance purposes.

How Often Will I Need To Provide This Information?

For both the FATCA and CRS regulations, you should only need to provide one valid self-certification form. Once a valid self-certification has been provided, you should only be asked to complete another self-certification form when your details/ information needs to be updated or because your reportable status may have changed.

Is My Information Safe?

TAINA takes information security very seriously demonstrated by our ISO27001 certification status. We continuously test our platform to ensure the highest of security standards are always adhered to, using external consultants to verify its excellence. In addition all Financial Institution clients of TAINA have in place strict codes of secrecy and security which protect customers' information.

What Information Will Be Reported To Tax Authorities?

All the information listed above in the CRS full form will be reported to local tax authorities for CRS reporting purposes. In addition to the CRS self-certification forms, other details reported to tax authorities may include the balance or value of the accounts and products or the total amounts of interest or payments credited.

Which Countries/Jurisdictions Are Participating In The CRS?

Over 120 countries have signed up and are committed to complying with the CRS regulation for the automatic exchange of information (AEOI). To see the full list of participating countries/ jurisdictions and the dates for annual CRS reporting please visit the OECD CRS portal.

Where Can I Find Further Information And Advice?

At TAINA we continue to monitor the FATCA and CRS regulatory landscape and will track both IRS and OECD drafts and published updates to the regulations. For more information on the CRS regulations and the CRS obligations of customers and financial institutions please refer to your local tax authorities' guidance or the  OECD Automatic Exchange of Information portal.

How Can TAINA Help With CRS Compliance?

The rise in OECD enforcement and CRS compliance tax authority reviews paired with the ever-changing legislation around CRS has further increased the risk for financial institutions. Making it more important now than ever to address your CRS validation process. The TAINA Platform takes care of your CRS  compliance in a seamless end-to-end process whilst maintaining an up to date, robust and detailed CRS ruleset. 

TAINA’s fully-automated FATCA and CRS Validation Platform can help financial institutions of all types lighten their compliance burden and prove their FATCA and CRS compliance whilst improving efficiency, reducing cost, mitigating risk and improving their overall customer and investor experience.

Using our flexible and lightweight platform you can automate and streamline your FATCA and CRS validation process whilst ensuring you have good year-end data that will result in clean FATCA and CRS reporting to tax authorities.

We would love to talk to you more about your current documentation validation process and how our award-winning FATCA and CRS Validation platform may add value to your organisation.

For more information on how our fully automated FATCA and CRS Validation platform can add value to your business, get in touch or request a demo to see it in action.