CRS circumvention schemes

Residence and Citizenship by Investment Schemes  

The OECD has published the results of its analysisOpens in a new window of over 100 Residence by investment (RBI) and Citizenship by investment (CBI) schemes offered by CRS-committed jurisdictions, identifying schemes that potentially pose a high-risk to the integrity of CRS.

CBI/RBI schemes are being offered by a substantial number of jurisdictions allowing individuals to obtain citizenship or residence rights based on local investments or against a flat fee. These schemes can be misused to hide assets offshore by avoidance reporting under the CRS.

Guidance for Financial Institutions

Financial Institutions are required to consider the outcome of the OECD's analysis of CBI/RBI schemes when performing their CRS due diligence obligations. 

The OECD has published practical guidance that Financial Institutions should consider when performing their CRS due diligence obligations (Frequently Asked Questions sectionOpens in a new window of the OECD’s analysis of CBI/RBI schemes). Where there are doubts regarding the tax residences of a CBI/RBI user, the OECD has provided further questions for Financial Institutions to ask the account holder.

Update due diligence procedures

What Reporting Financial Institutions (RFI) may observe and follow.

1. An RFI may not rely on a self-certification or documentary evidence, if the RFI knows or has reason to know that the CRS self-certification form or documentary evidence is incorrect or unreliable.
2. In making the determination of whether an RFI has reason to know that a CRS self-certification form or documentary evidence is incorrect or unreliable, it should consider all relevant information available to the RFI, including the results of the following CBI/RBI risk analysis undertaken by the OECDOpens in a new window.
3. To the extent that the doubt is related to the fact that the account holder or controlling person is claiming residence in a jurisdiction offering a potentially high-risk CBI/RBI scheme, RFIs may consider raising further questions, including:
   1. Did you obtain residence rights under an CBI/RBI scheme?
   2. Do you hold residence rights in any other jurisdictions?
   3. Have you spent more than 90 days in any other jurisdictions during the previous year?
   4. In which jurisdiction(s) have you filed personal income tax returns during the previous year?
4. If the facts and circumstances lead the RFI to have reason to know that an account holder or controlling person is claiming tax residency under a CBI/RBI scheme, it should take appropriate measures to determine the jurisdictions of tax residence of such persons.
5. Where it becomes evident to the RFI that the account holder may be a tax resident in another jurisdiction, the RFI should ask the account holder to submit a valid self-certification declaring the correct jurisdictions of tax residence.