This lesson provides a detailed examination of the Common Reporting Standard (CRS), the global standard for the automatic exchange of financial account information. It covers the due diligence procedures that financial institutions must apply, the reporting obligations, and the information that is exchanged between tax authorities.

• The CRS Standard: The Common Reporting Standard is a core component of the AEOI Standard. It provides for the annual automatic exchange of information on Financial Accounts held by taxpayers outside their jurisdiction of tax residence, with the tax authority in the jurisdiction in which they are tax resident . Financial Accounts covered include most bank deposits, financial assets held in custody, life insurance contracts, and financial investments .

• Who is Affected: A financial institution resident in a jurisdiction implementing the CRS will identify financial accounts held by individuals or entities liable to tax by reason of residence in jurisdictions with which that jurisdiction has an AEOI arrangement . The financial institution will collect and furnish information of the identified account holders and the financial account information on an annual basis . Taxpayers who are not tax residents of any territory outside their home jurisdiction will not be reported .

• Due Diligence Procedures: Reporting financial institutions are required to apply due diligence procedures to identify account holders (including controlling persons of the accounts) who are tax residents in reportable jurisdictions . The due diligence procedures are based on the international standard and involve:

  • For new accounts (opened on or after the implementation date): Account holders and controlling persons must provide self-certifications in respect of their personal information, including tax residence .

  • For pre-existing accounts: Financial institutions are required to conduct due diligence procedures to identify and verify the tax residence of the account holders and controlling persons . In case of doubt, self-certifications will be sought .

• Self-Certification: This is a formal declaration that the account holder and controlling person make in connection with their tax residence . An account holder or controlling person who knowingly or recklessly provides a statement that is misleading, false, or incorrect in a material particular is liable to penalties . The self-certifications must be kept by the reporting financial institutions for a period of six years .

• Information Exchanged: The information to be exchanged includes, for personal data: name, address, jurisdiction of residence, taxpayer identification number (TIN), and the date and place of birth . For financial account data, it includes: account number, account balance or value (year-end), and the gross amount of interests, dividends, and sale proceeds of financial assets as appropriate for the year concerned .

• Scale of Exchange: Tax authorities from 116 jurisdictions have commenced exchanges under the AEOI Standard . In 2024 alone, jurisdictions automatically exchanged information on over 171 million Financial Accounts, with a total value of nearly EUR 13 trillion . Over EUR 135 billion in tax, interest, and penalties have been raised by jurisdictions through voluntary disclosure programmes and other offshore tax compliance initiatives since commitments were made to implement the AEOI Standard .