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CRS AEoI 6 steps ahead for CRS Reporting Season
Automatic Exchange of Information (AEoI) Services for CRS and FATCA

6 Smart Steps to be Ahead of the Game for next CRS Reporting Season

17 December 2018
Read time: 5 mins
Director, Head of Regulatory & Compliance, Office Managing Director Zurich

The next CRS (Common Reporting Standard) reporting deadline in Switzerland is end of June 2019. Good plan guarantees half of the success. Getting all your stakeholders on board early in the process helps with their buy in and engagement. This step plan is to help you get structured and in control of the approaching CRS reporting deadlines.
 

Reporting under the AEOI is the new reality and will remain an ongoing annual compliance cost to many businesses for the foreseeable future. It is worth building in efficiencies to optimize the resources and time spent on processing and filing.

Financial Institutions that were subject to reporting obligations in the last two years, do not necessarily associate it with pleasant experience. It was particularly challenging for the fiduciary industry, which this article focuses on. Especially if a family office had more than 50 reporting entities and was required to report to more than one jurisdiction. It was inevitably a challenge to try to put together a data set required by the reporting schema, finalize Financial Institution registrations and get the xml to work under extreme time pressure in a small and very often under-resourced team of compliance experts, hardly any technology specialists.

The next reporting deadline in Switzerland is 30 June 2019, in the British Virgin Islands end of May 2019. If you are filing to Belize, you have to do it already by 31 March 2019. Stay up to date with reporting deadlines with our CRS and FATCA compliance app.

Good plan guarantees half of the success. Getting all your stakeholders on board early in the process helps with their buy in and engagement.

The following proven step plan can help you get structured and in control of the approaching CRS reporting deadlines.

1. Classify all entities under your management.

All companies, trusts, foundations and partnerships are considered entities under CRS and you should have classified them as Financial Institutions, active or passive NFEs already. Classify the missing ones as soon as practical. Do not forget to consider any changes in circumstances that occurred during the year that might have impacted the current CRS status. Take time to read the list you produced and review entities which status might have been impacted by an event as for example a termination of a discretionary investment agreement with an asset manager.

2. Make a list of all Financial Institutions and their residence for CRS purposes.

Next step is to filter out all entities with Financial Institutions status. A simple excel list will serve this purpose, make sure you include the jurisdiction of each reporting Financial Institution in one of the columns. Count a number of reporting Financial Institutions per jurisdiction and identify your main reporting jurisdictions. If most of reporting Financial Institutions are resident in Switzerland because they are incorporated in Switzerland or managed by trustees resident in Switzerland, Switzerland is your key jurisdiction to review first.

3. Put together a roadmap to manage upcoming deadlines.

Make a list of all jurisdictions you are subject to. Start with your main two jurisdictions to get your biggest compliance risk out of the way. Search online and download CRS guidance notes per jurisdiction and read the requirements paying attention to:

Registration requirements

Do all Financial Institutions have to register or only those with reportable accounts? Jot down the registration deadline on your roadmap to plan resources. In the BVI and Switzerland all Financial Institutions have to register.

Nil returns

Are nil submissions or declarations mandatory? Make a note of it so that you do not forget to file nil returns for Financial Institutions without reportable accounts. Switzerland and Cayman Islands Financial Institutions are subject to this requirement.

Exchange Agreements  

Download the list of all reporting jurisdictions in the country of residence of your Financial Institution to check which account holders are reportable next year. If they are your valued clients I recommend to notify them early of the upcoming submission.

Special reporting requirements or schema  

Does a jurisdiction use a special schema for reporting such a Trustee Documented Trusts in Switzerland? Are there any encryption requirements like in Luxembourg? Do you have to buy a certificate? Make sure you allow enough time to buy and install the software - do not leave it till the last minute.

4. Get your key stakeholders on-board early.

To be successful at passing a submission validation on any AEOI reporting portal, a Financial Institution must provide three sets of data:

  • identification information (names, addresses, tax residencies),
  • account information (name, number, type) and
  • financial information (account balance and transactions in the reporting period) and finally
  • generate an xml file.

Thus it is vital to be able to collate complete set of data early enough to prepare a CRS return on time. Because the different parts of the data puzzle usually come from various system sources and teams, it is important to identify your main stakeholders and collaborate with them early in the process to obtain the information you need.

  • relationship managers usually own and manage customer identification and contractual data
  • accounting team can deliver the financial information
  • IT support team can help you to investigate the xml format of the schema, perform data integration and encryption work and help you with portal access

Inform your stakeholders of the reporting deadlines, reportable clients, schema requirements and financial transactions they have to provide, including your internal deadlines. Pay attention to data quality and investigate any data discrepancies now to save time filing corrections or re-submitting reports later.

5. Identify and document account holders.

Next take the list of your Financial Institutions again and find out who the account holders are and whether you either have valid self-certifications from them on file or, in case they are pre-existing accounts, they are properly identified as part of your KYC and AML process.

Do not forget to identify and record controlling persons for your passive NFE account holders.

6. Automate your reporting process.  

If the number of Financial Institutions with reporting responsibility next year is overwhelming to you and in addition you are subject to a broad range of jurisdictions, where you have to file, consider automating the whole process. Invest in IT infrastructure or outsource the xml generation and even reporting to a third party. There is still time to outsource it and utilise our CRS reporting services. If you are considering it, please do get in touch with our CRS and FATCA experts

Stay up to date with the latest CRS reporting deadlines with our CRS reporting guide.

Finally relax, you are now set for next year’s CRS reporting.

 

Happy Christmas!
 

Anna Szkudlarek