The Common Reporting Standard

Abstract

AEoI is actually a combination of two concepts—the methodology for exchanging information and its precursor the methodology for collecting and organising the information preparatory to exchange. This is handled by the Common Reporting Standard (CRS). This chapter describes the nature of the different parties relevant to CRS—account holders, financial institutions and tax authorities. The authors segment each participant and discuss the challenges of identifying the key implementation hurdles for each. In particular, financial institutions will need to organise data in different ways to normal KYC and AML and collect data that they not only have not collected before but which will be seen by customers as intrusive at best, leading to significant issues of relationship management and communication. The data itself is only one aspect since CRS has a principle of Boolean ‘if…then…’ logic that makes defining a reportable account and even assessing the effort required, a much more complex issue. We introduce here the concept of investor self declarations (ISDs) that mimic some of the features of the US W-8 forms and create similar problems for financial firms. Control and oversight in CRS is delegated to each jurisdiction which is, in itself a variable to be considered for risk and compliance.