CRS Stride - AEOI / HMRC CRS & FATCA Reporting Solution

The Common Reporting Standard (CRS) developed by the OECD Council in 2014, is a global standard that requires all Banks and Financial Institutions operating in CRS participating jurisdiction to gather customer financial account information such as assets, income, taxable amounts, etc and report it among local tax authorities to combat tax evasion. HM Revenue & Customs (HMRC) the UK tax authority started to receive its first information under the UK’s Automatic Exchange of Information (AEOI) Agreements on 1 October 2018. Over 100+ countries/ jurisdictions have committed to implement CRS.

The Foreign Account Tax Compliance Act (FATCA), which was passed by US Tax Authorities, generally requires that foreign financial Institutions and certain other non-financial foreign entities report on the foreign assets held by their U.S. account holders or be subject to withholding on withholdable payments.

The Common Reporting Standard (CRS) was passed by the OECD under AEOI which comprises the due diligence rules for financial institutions to follow to collect and report the information for the automatic exchange of financial information.

Financial Institutions four categories of Financial Institutions are reportable under CRS and FATCA

• Custodial Institution
• Depository Institution
• Investment Entity
• Specified Insurance Company

Reportable Accounts five categories of accounts are reportable under CRS and FATCA

• Depository Accounts
• Custodial Accounts
• Equity and debt interests in investment entities.
• Cash Value Insurance Contracts
• Annuity Contracts

Reportable Person: The reportable person is an individual. This includes reportable individuals holding debt or equity interests in investment entities, such as trusts that qualify as financial institutions.

Reportable Entity: The reportable person is an entity. This includes:

• an entity that is tax resident in a Reportable Jurisdiction
• a specified US person
• an entity with no residence for tax purposes that has its place of effective management in a Reportable Jurisdiction

According to HM Revenue & Customs, the returns filing deadline for each year ending on 31 December is 31 May of the following year. Late returns are subject to a penalty.

The information that must be reported to tax authorities by the financial institutions are the account holder’s name, place and date of birth, Tax Identification Number (TIN), country/ jurisdiction of tax residence, entity type, the gross amount of interest paid on a deposit account & dividends paid or credited to the account and many more.

Over 100+ jurisdictions are participating in the CRS. In 2022, Jamaica, Kenya, Morocco and New Caledonia have been added to the list and Kuwait and Romania have been removed from the list.

• MG provides the CRS sample template files where FI’s can provide the CRS source data on the template file and to upload.
• MG will extract the CRS data by connecting to the CBS and other data sources through our highly secured  middleware and feed the CRS input data to CRS Stride platform automatically for CRS report generation (subject to product subscription).

Pre-CRS:

• Gap analysis: MG SME will analyse the CRS Input data and report the issues identified in the CRS data for data cleansing.
• Strategical advice on Deployment: MG SME will analyse the CRS Input data and report the issues identified in the CRS data for data cleansing.
• Implementation:
  The product inherits a straightforward implementation approach for On-Cloud or On-Prem deployment. The domain name creation and infrastructure readiness will be taken care by MG in case of On-Cloud and for On-Prem the dependency will be delegated to the financial institutions.

During CRS Reporting

• Data Orchestration & Management: CRS stride has the interactive modules perform data orchestration or data enrichments on the uploaded CRS data.

• Audit with 90 checkpoints: Provide risk-based audit Report along with CRS output report.
• Re-run the audit until zero error & generate report: There is no restriction on the report generation. The user can re-run the CRS report generation process as many times for checking the data corrections and CRS file generation.
• Assurance Validation:MG will engage the third-party SME for review the CRS data along with KYC documents and provide the assurance validation report which has details (subject to product subscription).
• Submission file generation: Based on the input lookup files provided by the financial institutions, the XML file for submission will be generated by the platform inline with the rules and specifications from HMRC.

Post-CRS: