Are FinTech Companies Subject to CRS Requirements?

Let’s talk today about CRS (Common Reporting Standards introduced by the OECD).

If you don’t know what CRS is (lucky you) – it’s the Common Reporting Standard approved by the OECD Council in 2014, allowing countries to obtain information from their financial institutions and automatically exchange that information with other countries on an annual basis. In a way, it’s very similar to FATCA but implemented on the international level.

The question about whether or not CRS applies to FinTech companies comes up every now and then and my [simplified] answer is – "normally no".

Disclaimer – “normally no” does not mean always no, because I obviously don’t know your specific business and circumstances.

So, why “normally no” and what arguments can you use to argue the exemption?

Well, there are 3 different arguments that can support your case:

• Financial institutions that are normally subject to CRS requirements are explicitly listed and Payment Institutions, E-money Institutions, and similar institutions are not explicitly listed.

Who is listed: The OECD CRS Commentary defines reporting financial institutions in subparagraphs A(3) through (8) of Section?VIII: “The term Financial Institution means a Custodial Institution, a Depository Institution, an Investment Entity, or a Specified Insurance Company, as defined in subparagraph A(3)”.

• There are certain Financial Institutions that are explicitly exempt (for example, card schemes and credit card issuers). There is another exemption relevant to the FinTech industry, which is:

“Any other Entity that presents a low risk of being used to evade tax, has substantially similar characteristics to any of the exempt Entities.” => the status of low-risk can be confirmed by the fact that FinTech entities are normally regulated, have AML programs in place, are subject to regular audits and don’t handle large balances.

• Balances under 50,000 EUR are normally not-reportable for CRS purposes, and FinTech?clients rarely have balances that are so large.

Do you have more questions about how to treat, onboard, report, or risk-rate corporate clients? If so - consider joining my Workshop on How to Onboard Corporate Customers and Review Complex Legal Structures during October 20-21.

Core templates, case studies, and step-by-step instructions?for FinTech startups?on how to?onboard and risk-rate corporate customers?and review complex legal structures.?

It is common knowledge in the FinTech industry that the process of reviewing and approving corporate?clients is complex, slow, and time-consuming. Many entities that apply to become a customer will drop out and never complete their registration process. Most applicants will send you inconsistent information. It is not uncommon that onboarding and approving of a corporate customer by a financial institution could take 4-6 months.?

The ultimate goal of this workshop is to help you streamline and optimize your onboarding process and simplify your decision-making in relation to corporate clients.

What you'll get:

Access to the next?scheduled LIVE training taking place on October 20th and 21st 2020?(approximately 1 hour each day), where we will cover:

• Information to collect at onboarding
• Risk indicators associated with corporate customers
• Risk indicators associated with complex legal structures
• Risk assessment matrix
• Recorded instructions (5 recorded video training) dedicated to the onboarding of corporate customers
• Downloadable templates for all topics covered
• The training will be recorded and you can access them later at any time.

AGENDA FOR OCTOBER?20th - 21st 2020?LIVE TRAINING:

Day 1: Corporate Customer onboarding cycle,?decision steps at each stage,?what information to collect, and how to verify it.

Day 2:?Risk indications, red flags, UBO and ownership assessment, business model review, and linked accounts.

JOIN NOW!