Common Reporting Standards' (CRS) early adopters clearly demonstrate that compliance with the implementation comes with challenges. It takes time to complete preparatory work and you must make sure to adhere to appropriate local regulations to classify and report. In this second and last article, we go over some take-away lessons.
Read the
first part of this article and
watch our on-demand webinar to learn more.
FATCA and CRS confusion persists
A key lesson from CRS early adopters is that FATCA and CRS
are still being confused and interpreted as part of the same
legislative piece. Leila Szwarc warned: "From experience we
see institutions claim they are FATCA compliant, therefore
don't need to be compliant with CRS, or have the same
information." Naturally, the two schemes have significant
differences.
Szwarc continued: "CRS and have similarities but it's
important to understand they are not the same and each has its own
penalties and requirements. CRS jurisdictions may have their own
reporting languages and portals, FATCA is targeted at US citizens,
whereas CRS is much broader, and is based on residency." Late
adopters should factor in time to ensure that staff that is already
familiar with FATCA can learn the new requirements brought by CRS.
Depending on the situation, FIs and entities must file both FATCA
and CRS reports in each jurisdiction.
Service provider market is fragmented
Finding competent partners to administer CRS is not easy,
warned Leon Mao, Head of Family Business & Wealth Solutions at
TMF Hong Kong, especially in smaller countries. "The feedback
we are getting from small jurisdictions is that providers are not
always able to assist with compliance people, like lawyers and
technicians who are needed to provide a comprehensive CRS service.
Some service providers will drop out of the market. I can see
consolidation in the future, as clients go with those who have the
platform, the internal processes, and the people to deal with
things like tax portals and tax authorities on behalf of the
client."
Penalties for non-compliance
In Hong Kong, the penalties vary from fines to
imprisonment, from six months up to three years. Sophia Lim,
Director Client Relationship at TMF Singapore, confirmed that
Singapore takes an equally stringent view. "If convicted they
can be liable to a fine or imprisonment, depending on the
seriousness of the breach."
Unofficial penalties can be just as severe. Non-compliance can
tarnish a corporate reputation, and lead to loss of confidence
amongst customers. Global exchange and access to information
increases reputational risks from non-compliance of companies and
FIs, as the information becomes public faster than ever before and
it's spread globally from day one.
There are challenges, stay informed...
The first step for entities seeking to adopt smooth and
efficient classification and reporting is to get in touch with a
service provider to discuss applicable requirements. Each entity
will have different needs.
With over 6,500 experts serving 38,000+ entities in over 80
countries, we help companies and Financial Institutions remain
compliant with the local implementation of CRS. Our local teams can
assist with entity classification, due diligence, and
reporting.
Watch our on-demand webinar now to learn more
about:
- CRS classification and reporting in APAC – who is in scope?
- What is reportable and what is not reportable?
- Role of your banks and corporate service providers in the CRS classification, on-boarding and reporting
- Differences and similarities between FATCA and CRS
- Consequences of non-compliance
Interested in finding out more about our CRS services? Go to
www.tmf-group.com/enquiry to make an enquiry.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.