Expat financial advice providers and their clients need to be especially vigilant to ensure that they meet their legal obligations under the newly updated Common Reporting Standard (CRS), which will come into effect in September 2018.
It is likely that those who do not take steps to ensure full familiarity and compliance with the latest and extended OECD (Organisation for Economic Co-operation and Development) rules regarding the reporting of offshore income may face investigation and penalty.
Due to the complexity of cross-jurisdictional financial management, expats are perhaps the group at the highest risk of innocently falling foul of the rules, particularly if they are poorly advised or have a wealth manager or financial adviser who fails to securely or promptly deliver important communications.
Under the newly expanded and more stringent rules, even errors made in good faith could result in an investigation. This is partly because any information shared through official CRS channels is viewed as being verified by the recipient.
There are many pieces of information the client and adviser need to ensure are correct. For example, CRS requires correct and up to date addresses and financial details for all financial interests across all relevant jurisdictions. For those with complex financial affairs across multiple asset classes, regions and countries, this can be complex, so reliable expat financial management is likely to be essential.
Furthermore, information provided should be so detailed and specific that it provides no room for ambiguity. For example, some named addresses may trigger an investigation if it is not made clear and verifiable that they are only used for holidaying or temporary stays rather than acting as a main residence.
For example, a client may own a house in Malta but reside in the Netherlands. If correspondence from the client\’s Maltese bank account is sent to the Maltese address this could trigger CRS reporting of the fact and result in notification to the authorities in the Netherlands.
Such instances can provoke a chain of actions and investigations and, even if clients are exonerated, can cause considerable inconvenience and distress. As such, clients and their advisers should revise their addresses with all their wealth and asset managers, banks, brokers, insurance companies and other interested parties.
If you need more information on CRS and other wealth management issues, contact Blacktower today for expat financial advice from people who understand your situation.