OECD releases Standard for Automatic Exchange of Financial Account Information in Tax Matters
Posted by William Byrnes on July 21, 2014
The OECD today released the full version of a new global standard for the exchange of information between jurisdictions.
I have posted Notes on the Common Reporting Standard for Automatic Information Exchange on my new International Financial Professor Law Blog at
CRS Due Diligence Standards similar but not identical to FATCA
The CRS contains a reporting and a due diligence standard that underpins the automatic exchange of information, very similar to FATCA.
Due diligence distinguishes between pre-existing accounts and new accounts, individual accounts and entity accounts.
Pre-existing accounts do not have a de minimis amount but are divided between low value and high value accounts.
Low value accounts have a permanent residency based test based on documentation or, failing that, based upon indicia. If indicia are found, then either the account holder must provide self-certification or the account must be reported to all jurisdictions to which the indicia attach.
High value accounts are defined as having an aggregate balance or value of $1 million US dollars by December 31 of a calendar year. High value accounts require a paper based search as well as the test of actual knowledge of the relationship manager.
All new individual accounts (no de minimis) require self-certification, with confirmation of its reasonableness, which can be performed at the time of account onboarding.
Preexisting entity accounts
Preexisting entity accounts firstly need to determine if the entity is a reportable person, generally using available AML/KYC information, and if such information is not available, then a self certification will be required from the entity.
However, a preexisting entity account de minimis size of US$250,000 is available at the option of the jurisdiction adopting the CRS.
If the entity is a passive entity then the residency of the controlling members of the entity must be determined. Passive entity status may be determined by self-certification unless the financial institution has contra-indication information, or information is otherwise publicly available to refute the self-certification. Controlling members of the entity may be determined based upon the AML/KYC information available. Control must be interpreted in a manner consistent with the FATF standard.
New entity accounts
For new accounts, the de minimis option is not available because self-certification is easily obtainable at account opening.
free Lexis FATCA Compliance chapter download here —> http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671 Number of Pages in PDF File: 58
Over 600 pages of in-depth analysis of the practical compliance aspects of financial service business providing for exchange of information of information about foreign residents with their national competent authority or with the IRS (FATCA).