The Common Reporting Standard (CRS) is now live and has brought with it a number of new regulatory requirements for in-scope Financial Institutions. One key change is the absence of a reporting exemption for listed equity and debt. This is contrary to the US FATCA position where the definition of in-scope accounts specifically excluded equity and debt interests in investment entities where those interests were regularly traded on an established securities market.
The removal of this provision means that equity and debt interests in certain entities, such as listed funds, exchange-traded funds and investment trust companies, may be reportable under CRS if they are held by non-domestic investors. Newly caught entities will therefore have additional compliance obligations including investor due diligence and reporting. UK CRS Guidance provides some clarity regarding due diligence requirements in circumstances where interests are held through CREST, traded on the secondary market, and at issuance.
We are talking to a range of impacted Financial Institutions and advising on how to ensure robust processes are in place to meet the CRS challenge.
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