Certificate on the Common Reporting Standard (CCRS)

Tax transparency regulations are still fairly new, and many frontline and operational staff find it difficult to explain the rationale of collecting such tax related data from their customers. Tax being a sensitive issue, customers tend to be reserved and hesitant when providing such information. Staff in client facing roles often struggle to alleviate any customer concerns about where the data is going and who will get access to it.

Financial institutions are required to validate the reasonableness of the tax residency claim made by their clients. Without a proper understanding of the spirit and key objectives of the CRS, it will be very difficult to effectively and efficiently handle communication with clients as well as being able to validate the reasonableness of the form at the time of on-boarding.

Common issues will arise such as poor data quality, lack of response from clients, clients providing explanations that may or may not sound reasonable etc. Based on the fact patterns, you and your team will need to make a call as to whether to onboard the customer or not.

Financial institutions have to monitor for any changes that may result in a change in tax status for their clients. Without an awareness across the institution of what could constitute a change in tax status, there may be many instances which fall through the cracks.

Many financial institutions face challenges with this due to inconsistent or poor data quality, lack of awareness of what data needs to be reported in what format in which jurisdiction, and insufficient data validation at the time of reporting. This has led to many firms being questioned by the tax authorities and having to re-submit reports that they had previously filed in the earlier years.