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The Common Reporting Standard

CRS - The Report

In October 2018 Filippo Noseda, Partner in Private, wrote a report which deals with the privacy and data protection implications of the Common Reporting Standard (CRS) and the new registers of beneficial ownership (BO Registers).

The CRS is a global system of automatic information exchange developed by the OECD (the Organisation for Economic Cooperation and Development, based in Paris) adopted by 102 jurisdictions around the world. The likely scale of information exchange and transparency under the CRS and the new beneficial ownership registers is immense. Looking at the CRS in particular, in March 2017 the European Commission estimated that some 19 million citizens born in an EU Member State were living in another Member State, with an additional 35 million people born outside the EU living within the EU. In practice, it is likely that many of these people, 54 million in total, will own bank accounts in more than one country, leading to information exchange under the CRS.

A number of European data protection agencies have raised concerns about the broad nature of the new rules and the fact that they require a generalised registration/exchange of information which is automatic and independent of the existence of any actual risk of tax evasion, raising the question of proportionality.

Under the CRS, financial institutions based in any of the countries that have adopted the standard are required to provide their local authorities with a large amount of highly sensitive information about their clients for onward transmission to the tax authorities of the country of residence of the client.

In addition, new EU Anti-Money Laundering rules enacted at the end of June 2017 introduced public registers which allow anyone who can demonstrate a legitimate interest to obtain information about the beneficial owners of corporate and other legal entities throughout the EU. The introduction of interlinked registries containing full beneficial ownership information has been heralded by the G-5 as the next step in the drive towards transparency and a number of jurisdictions outside the EU have started introducing central registers, albeit with different degrees of public access.

The likely scale of information exchange and transparency under the CRS and the new beneficial ownership registers is immense. Looking at the CRS in particular, in March 2017 the European Commission estimated that some 19 million citizens born in an EU Member State were living in another Member State, with an additional 35 million people born outside the EU living within the EU. In practice, it is likely that many of these people, 54 million in total, will own bank accounts in more than one country, leading to information exchange under the CRS.

The report tracks the history of the CRS and the EU's BO Registers, and addresses the question of proportionality. It also analyses a number of less intrusive measures which would enable authorities to achieve the desired objective of clamping down on tax evasion.

Click here to download the full report and here to download the flyer.

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