Expanding global cooperation: How new jurisdictions commit to CRS exchanges

Expanding global cooperation: How new jurisdictions commit to CRS exchanges

On 23 April 2024, the Organization for Economic Co-operation and Development (OECD) published a pivotal update, listing jurisdictions newly committed to the Automatic Exchange of Information (AEoI) and CRS Reporting. Taina Tech, which offers a fully automated FARCA and CRS validation platform, has recently commented on what these changes mean

The OECD’s recent publication indicates that four jurisdictions — Georgia, Kenya, Moldova, and Ukraine — are poised to initiate their first CRS exchanges in 2024. Following closely are nine additional jurisdictions scheduled to commence between 2025 and 2027, including Armenia, Morocco, Rwanda, Senegal, Tunisia, Uganda, Cameroon, Mongolia, and Papua New Guinea, the latter being the third Global Forum member to commit to AEoI reporting this year, alongside Senegal and Cameroon. Presently, an overwhelming majority, nearly 75% of Global Forum members, have pledged to start AEoI by a set date, with many already participating actively.

Financial Institutions (FIs) in CRS-participating countries are now mandated to identify and annually report any tax residents or reportable accounts, necessitating continuous updates to stay aligned with the list of participating jurisdictions. This is crucial as FIs must report account holders from all countries that have established bilateral exchange agreements.

The OECD has also updated its website with a list of activated exchange relationships for CRS, providing an essential resource for FIs to ensure compliance.

Adapting to these updates poses substantial challenges for tax operations, Taina said. The updates necessitate that financial institutions enhance their internal systems and processes to be agile enough to accommodate these changes. Inadequate adaptation can lead to non-compliance, entailing significant financial and reputational risks.

FIs should undertake several critical steps: conducting a gap analysis between current data in their systems and the required reporting data, revising due diligence processes for both existing and new account onboarding, collaborating with IT to produce necessary data outputs for CRS reporting, and training staff to ensure adequate understanding of CRS requirements.

Moreover, as the landscape of tax regulation evolves, notably with the introduction of CRS 2.0 agreed upon by the OECD last year, tax operations teams are urged to review and update their compliance processes and systems by 2027 to accommodate these amendments.

In response to these regulatory challenges, TAINA offers a solution through its fully automated FATCA and CRS Validation Platform. This platform allows financial institutions to manage their CRS self-certification compliance efficiently, thereby enhancing compliance accuracy, reducing costs, mitigating risks, and improving both customer and investor experience. By integrating TAINA’s platform, institutions can ensure robust and detailed compliance with CRS rules, streamline their validation processes, and maintain high-quality data for reporting purposes.

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