Common Reporting Standards (CRS)

🔹 Definition

The Common Reporting Standard (CRS) is a global standard for the automatic exchange of financial account information between jurisdictions. Developed by the Organisation for Economic Co-operation and Development (OECD) in 2014, CRS aims to combat tax evasion and improve international tax transparency by requiring financial institutions to report information about non-resident account holders to their local tax authority, which is then shared with other participating jurisdictions.

CRS is often compared to the U.S. FATCA (Foreign Account Tax Compliance Act), but it is broader in scope and involves reciprocal reporting among over 100 participating jurisdictions.

🔹 Frequently Asked Questions (FAQs)

Q1: What kind of information is reported under CRS?
Financial institutions report:

• Name, address, tax identification number (TIN), date and place of birth of account holders
• Account number and account balance
• Gross interest, dividends, and other income
• Names and identifying details of controlling persons (for entities)

Q2: Who is affected by CRS?

• Individuals and entities with financial accounts outside their country of tax residence
• Financial institutions such as banks, custodians, insurance companies, and investment funds
• Corporate structures with passive income and controlling persons in different jurisdictions

Q3: What is the difference between CRS and FATCA?

• CRS is a global standard adopted by many countries and involves multilateral information exchange.
• FATCA is a U.S. law that focuses on reporting to the U.S. Internal Revenue Service (IRS), often unilaterally.

Q4: How does CRS relate to AML compliance?
CRS complements AML efforts by:

• Promoting transparency of cross-border financial flows
• Reducing the use of offshore accounts to conceal beneficial ownership or taxable income
• Encouraging stronger customer due diligence (CDD) and tax residence self-certification processes

Q5: What are the penalties for non-compliance with CRS?
Penalties vary by jurisdiction but may include:

• Regulatory fines
• Withholding tax penalties
• Reputational damage or loss of financial institution license