The Organisation of Economic Cooperation and Development on February 13, 2014 released the Common Reporting Standard (CRS), which seeks to establish a new global standard for automatic exchange of financial account information between Governments.
As with the Foreign Account Tax Compliance Act (FATCA) the CRS model imposes obligations on financial institutions (FIs) to identify reportable accounts and obtain the accountholder identifying information that is required to be reported for such accounts with their local tax administration. It also provides the scope of the information to be collected and exchanged with the accountholder’s residency country.
A total of 42 countries have already committed to adopting the CRS and the expectation is that at least some of these agreements will be entered into later this year. The documents released are an introduction and overview on automatic exchange of information and text of the model Competent Authority Agreement and CRS due diligence processes.
While the documents released do not include any specific timelines, we understand that FIs in countries which adopt the standard will be required to undertake the necessary due diligence obligations in 2016 with reporting starting in 2017.