The Organisation for Economic Co-operation & Development (OECD) has recently published three new Common Reporting Standards (CRS) Frequently Asked Questions (FAQs) on its website. The new FAQs were provided by the UK’s HM Revenue & Customs (HMRC).

The FAQs relate to the following subjects:

• Reliance on publicly available information

Can Reporting Financial Institutions solely rely on the fact that an Account Holder is included in the FATCA FFI list to reasonably determine that such Account Holder is a Financial Institution pursuant to Section V(D)(1)(b) or Section VI(A)(1)(b)?

No. Section V(D)(1)(b) and Section VI(A)(1)(b) specify that the use of publicly available information is subject to the condition that such information can be relied upon to ‘reasonably determine’ the status of the Entity. While the FATCA FFI list is included as an example in paragraph 12 of Section V of the Commentary, the mere inclusion of an Account Holder on the FATCA FFI list is not sufficient on its own to reasonably determine that such Account Holder is a Financial Institution for CRS purposes.

• Qualified Credit Card Issuers

A ‘Qualified Credit Card Issuer’ is defined at Section VIII(B)(8) as a Financial Institution that is a Financial Institution solely because it is an issuer of credit cards that accepts deposits only when a customer makes a payment in excess of a balance due with respect to the card and the overpayment is not immediately returned to the customer, and implements certain policies and procedures by the date applicable to the term ‘New Account’ in the jurisdiction in which such Financial Institution is in scope of CRS obligations. Can a jurisdiction include a Financial Institution in the definition of ‘Qualified Credit Card Issuer’ if the Financial Institution meets the requirements set out in Section VIII(B)(8) and implements the required policies and procedures at a later date but before the start of a subsequent reportable period?

Yes, provided all required policies and procedures are in place at the start of and throughout such subsequent reportable period.

• Financial Accounts in the context of CFD trading activities

Does a Financial Institution maintain a Financial Account under section VIII(C)(1) of the CRS because it holds client funds in the context of its business of trading in CFDs with such clients?

As a Custodial Account is an account that holds one or more Financial Assets for the benefit of another person and the term Financial Assets does not include money, the accounts in which the Financial Institution holds the client funds do not constitute Custodial Accounts. Such accounts can constitute Depository Accounts to the extent the Financial Institution maintains the accounts in the ordinary course of a banking or similar business.

HMRC is currently considering how to reflect the new guidance in its International Exchange of Information Manual. We will keep members apprised of any developments.

Emily Deane TEP, Technical Counsel & Head of Government Affairs at STEP