As part of their commitment to adhering to the OECD’s requirements under CRS, both the Jersey and Guernsey authorities are required to undertake audit inspections of financial institutions.
The audit is designed to ensure that robust processes exist internally to manage the CRS status of structures, accounts and account holders, and that relevant staff have sufficient knowledge internally to ensure that compliance is being met.
The first audits have already begun in Guernsey and we expect that Jersey shall follow suit shortly, and will continue into 2021.
As a starting point, below is an overview of the matters that other jurisdictions have considered when undertaking CRS audits. We would anticipate a similar approach in the Channel Islands:
Who is responsible for CRS? What oversight is there together with approval of information and reports? Is the function given sufficient resource and on-going support as to how changes in legislation and requirements are captured?
How are the relationship manager requirements met in the business? How are the relationship managers defined and do they have enough knowledge to be able to spot anomalies in reports, and can they question a client’s self-certification?
Many organisations have a CRS policy, but are the underlying processes mapped i.e. is it known that we need to produce a report, but how is that done?
How is this undertaken? Are TIN validations being used? Are the relationship managers signing them off? Are they comparing to due diligence collected etc.?
How are these picked up by the business?
How are they arrived at? What evidence do they have?
How is reportable data processed? Who signs it off? What checks are undertaken before the report is submitted?
Of course under a risk based approach, some elements are more important than others, but this is really the foundation of how tax reporting moves from a once a year project, to business as usual.
Most of the concepts above can also be extrapolated to undertaking a health check of FATCA reporting, which will also be relevant to such financial institutions.
We can support financial institutions in undertaking a ‘health check’ of their internal CRS processes and procedures, and can highlight any areas of particular risk or concern.
Having a document prepared which shows a review has been undertaken will only serve to assist financial institutions if they happen to be audited. Any key findings from our review will allow that financial institution to focus their efforts going forward on any areas where it is felt that additional measures should be put in place.
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The tax landscape is in a period of hyper change. At Grant Thornton Channel Islands, we are constantly looking for ways to support our clients and service providers so they remain ahead of the game with the ever changing tax legislation and practice.