FATCA and CRS Reporting

What are FATCA and CRS?

The Common Reporting Standard (CRS) came into effect at the start of 2016 in a number of countries including the UK and Ireland. Its goal is to help identify individuals who may have assets and income in other jurisdictions.

To help put this into context, CRS is commonly seen as an extension of the Foreign Account Tax Compliance Act (FATCA) which was enacted in the US in 2010 and has put into place a framework for sharing tax information between different jurisdictions.

FATCA was designed to help identify US citizens and residents with overseas assets or income and prevent tax evasion. Financial institutions worldwide have to register with the US Internal Revenue Service (IRS) and will have to disclose customers with a US tax status.

This format has been adopted in a number of other jurisdictions, including the UK, where it is now local law.

What does this mean for new customers?

From the 1 July 2015, our savings and investment application forms included the question, 'Are you a tax resident or citizen of the USA?' This question must be answered.

We will also ask a number of questions to identify whether new customers are tax resident in other jurisdictions. This allows us to meet our reporting responsibilities under the legislation.

How have we responded?

We, in line with all other UK financial institutions, are responsible for identifying where customers are tax resident and, where required, to report their details to HMRC or the Irish Revenue. While these rules initially applied to US persons overseas, over 100 countries have now signed up for similar arrangements with more expected to join in future.

Our new business applications, together with some of our servicing processes, have been changed to capture the information we need to comply with the requirements.

This affects most products except pension plans, Individual Savings Accounts (ISAs) and mortgages. While pension plans and ISAs themselves are out of scope, additional questions must be answered for Wrap SIPP and Wrap or Fundzone ISAs because their associated cash accounts are in scope.

Which abrdn products are affected?

Why we have removed ‘none of the above’ as an option

Originally the ‘none of the above’ option was included for when a client fell into a certain specialist category that we expected very few of our customers would need to use.

These categories include international organisations, government departments and bodies covered by specific US tax concepts. However, we have identified that it was being used where someone wasn’t sure of which classification applied to them.

Our experience has shown that all business received since these changes were introduced have fallen into one of the common categories.

If you believe your business doesn’t fit with the categories on offer then please speak to your account manager or usual contact. This is a global requirement and more information can be found via the links below.

Other useful links

HMRC guidance on automatic exchange of information Automatic Exchange of Information: introduction

List of jurisdictions signed up to CRS – the OECD website CRS by jurisdiction - Organisation for Economic Co-operation and Development