Common Reporting Standard
Where does the Common Reporting Standard (CRS) idea comes from ?
The concept of agreeing to a universal standardized cooperation system for the fight against tax evasion is not new and has its roots in the first Convention on Mutual Administrative Assistance in Tax Matters, developed by the OECD and the Council of Europe in 1988.Following the 2010 US Foreign Account Tax Compliance Act (FATCA), the Common Reporting Standard (CRS) emerged in May 2014 when forty-seven countries agreed to sign the multilateral agreement on the Standard for Automatic Exchange of Financial Account Information regarding bank accounts for tax purposes across the world.
OECD is revising constantly its Frequently Asked Questions. You will find the latest version under CRS-related Frequently Asked Questions.
One could note the unique status of the United States that did not sign the international treaty and that receives information relating to US citizens' accounts from foreign countries who follow the requirements of the FATCA act.
CRS regulation in a nutshell
- The information will be exchanged annually between the jurisdictions for which the convention is in force and in effect;
- All financial institutions (banks, brokers and insurance companies) will be reporting the information;
- The information reported concerns individuals and entities;
- Personal details of the account holder, account identification details, account balance and financial information will be reported;
CRS Practical Implications
- Data gathering becomes more important on all levels;
- Data quality is a challenge for all institutions;
- Flexibility is key to keeping the pace with changing regulatory demands;
- All financial institutions will be analyzing solutions in-house or will be buying them from the market tools;
- The decision depends on the resources (IT and staff);
Common Reporting Standard technological challenges
New technologies will allow businesses and financial institutions to ease the use/management of large amounts of data which will be collected and processed faster and more accurately. In the future, it is certain that reporting requirements will become more complex, detailed and demanding, and it is better if businesses prepare themselves for a complex compliance future.
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