Tax Reporting Requirements for FATCA and CRS

Old Mutual Wealth entities have to fulfill the requirements of new tax reporting laws, specifically, the Foreign Account Tax Compliance Act (FATCA) from the United States (US), the Common Reporting Standards (CRS) and Tax Information Sharing Agreements (TISAs) coming out of the UK.

The aim of these requirements is to ensure customers cannot avoid their tax liabilities by holding unreported assets in accounts held offshore.

These requirements necessitate ‘financial institutions’ (FIs) – such as us - to capture and report certain information to overseas tax authorities. Whereas FATCA provides data to the Internal Revenue Service (IRS) on US ‘persons’ (citizens and green card holders) with wealth outside the US, the CRS operates on a tax residency basis (with disregard for nationality, domicile or citizenship).

It is extremely important when advising clients that they understand the consequences of failing to declare offshore income and gains, and, more importantly, to ensure clients are not in an arrangement which they think is legitimate when it isn’t. Disclosure is not a bad thing, and if clients have assets that they haven’t already declared, they need to act while they still can.

Offshore bonds in the majority of jurisdictions legitimately and legally provide gross roll up, tax deferral, and a number of flexible decumulation options where, with the benefit of quality advice, the burden of tax might be reduced. Anyone concerned about whether their income and gains need to be disclosed should take action, especially as this is the final chance to regularise affairs in the UK, and in numerous other countries offering their own disclosure facilities.

We have created some documents to help you understand AEOI:

Change to new business process

Self-certification forms

Your clients will need to complete the relevant self-certification form when submitting a paper application. This form is a key requirement of FATCA and CRS. It enables the client to certify their tax status and provide the required information to enable a financial institution to comply with its tax reporting obligations:

Please always visit the literature library for the updated application forms.

  • If you use Wealth Interactive to submit new business for individual investors the process is simple and intuitive. When setting up a new client, some additional fields will have to be completed and whilst going through the on-line application, you will be prompted to input the new information. There is no requirement to complete a self-certification form for individual investors and upload it to the client’s document library.
  • If you submit business on paper for individual investors then, as well as submitting the application form, your clients will also have to fill in a separate self-certification form, which contains the additional tax information we require.
  • If you submit business on paper for corporate and trustee investors the process hasn’t changed. Since the introduction of FATCA in 2014 your clients will have been filling in an application form and a separate self-certification form. This self-certification form has been updated to include the all the relevant tax information we require.


Knowledge Direct articles

Financial Adviser Verification

The content of this site is for advisers only. It is not for the use of Hong Kong advisers. You can change the regional content by selecting a region from the drop down box in the top right-hand corner.