On 1st of January 2016, the CRS (Common Reporting Standard) became effective. This new regulation results from an initiative of the OECD (Organisation for Economic Co-operation and Development) to expand the scope of FATCA to as many jurisdictions as possible in order to prevent tax fraud by individuals investing and earning income through offshore Financial Institutions (FIs). These new global reporting standards, as well as FATCA, are commonly referred to as Automatic Exchange of Information (AEoI).
So far over 90 jurisdictions have either signed, or have committed to sign, Multilateral Competent Authority Agreements, which bind these Partner Jurisdictions to have their financial institutions identify and report on all their respective reportable accounts to their domestic tax authorities.
Not only will the CRS greatly increase the reporting requirements that fund managers are already facing, but the challenge of remaining at all times fully up to date and compliant, while the legislation evolves and the number of Partner Jurisdictions increases, will also reach a whole new level.
This is where Alter Domus can help: as we have already been doing for FATCA compliance, we can assist fund managers throughout the whole CRS process and its obligations, from the CRS status determination, to the identification of reportable accounts, the collection of information and the reporting.
Our vertically integrated approach will allow us to perform the CRS compliance process for our clients with the efficient use of information and exchange of documents. As we are providing services across the entire value chain of investment structures, from fund level down to local Special Purpose Vehicles, we will, in most cases, have already collected most of the required information at the early stages of the KYC and registration process. We will leverage all of this existing information to ensure our clients a painless and smooth process.
Alter Domus is committed to guaranteeing its clients a thorough monitoring of any updates in the regulatory world. As more countries will be entering the CRS in the coming years, we will continue to act as safeguards to ensure our clients remain compliant in every jurisdiction in which they operate.
As of 1st January 2016, Financial Institutions (FIs) must identify their account holders. In other words FIs must obtain from each new account holder a self-certification disclosing the CRS status (for an entity) and the tax residence (for individuals). The fact that FIs must start the identification process from 1st January 2016 has two direct impacts:
Although this step is very similar to that of FATCA, the definition of Financial Institutions has been broadened and is less subject to exceptions and exemptions. This will inevitably lead to entities not having had to comply with FATCA, having now to classify as CRS applying entities.
Alter Domus is pleased to be sharing its FATCA and KYC experience and can assist its clients, along with their Legal Advisers, in determining their CRS status and in identifying the controlling persons and investors involved who are residents of reportable countries.
Considering the number of countries involved in CRS, it is now clear that the main difference from FATCA and the biggest challenge of the CRS is the significant increase in the volume of reporting obligations.
Alter Domus has all the automated and integrated reporting solutions already in place to manage for its clients the information collection, document management, reporting preparation, and transmission of the reporting to the competent tax authorities.