Why tax advisers need to understand FATCA and CRS

What are FATCA and CRS? ‘FATCA’ stands for Foreign Account Tax Compliance Act. It refers to 2010 US federal law by which the US sought to impose on the rest of the world obligations to report to the US authorities various financial information about offshore accounts of US citizens and tax residents. It was intended to counter evasion of US taxes.

In common with many other countries the UK entered into an agreement with the US that is intended to comply with FATCA.

Since then the UK and numerous other countries have agreed to exchange information under an Organisation for Economic Co-operation and Development (OECD) regime called the common reporting standard (CRS). The CRS rules bear considerable similarities to the FATCA rules. Indeed they are largely based on them.

Under FATCA and CRS ‘reporting financial institutions’ have to carry out due diligence in...