Banking4 min read
What your bank reports about you: CRS, FATCA and the form you signed
Roughly 120 jurisdictions now exchange account data automatically. Nobody reads the form that starts it, which is unfortunate, because it is the single document your tax position is later measured against.
Somewhere in your account opening pack you signed a self-certification. It asked which countries you are tax resident in and for a tax identification number for each. You probably filled it in from memory in under a minute.
That form is the input to an automatic annual exchange of your financial information between roughly 120 jurisdictions. It is also the document a tax authority will hold up if your declared residence and your actual life diverge. Worth a minute more attention than it usually gets.
Two systems, not one
- CRS — the OECD Common Reporting Standard. Multilateral, residence-based, and near-universal. Your bank reports you to your country of tax residence, wherever the bank is.
- FATCA — the US regime. Unilateral, citizenship-based, implemented through intergovernmental agreements, and backed by a withholding penalty on institutions that do not comply. It identifies US persons specifically, and it exists because the United States taxes citizens rather than residents.
The United States receives under FATCA and does not fully reciprocate under CRS, which is the origin of the frequently repeated claim that the US is now the world's largest tax haven. That is a policy argument. Operationally, what matters is that both systems run over the same account-opening form.
What is actually reported
| Field | Reported? |
|---|---|
| Name, address, date of birth | Yes |
| Every jurisdiction of tax residence you declared | Yes — all of them, not just one |
| Tax identification number for each | Yes |
| Account number and the institution's identifying details | Yes |
| Account balance or value at year end | Yes — or the value at closure if you closed it during the year |
| Gross interest, dividends and other income credited | Yes |
| Gross proceeds from sales of financial assets | Yes, for custodial accounts — note *gross*, not gain |
| Individual transactions, merchants, counterparties | No |
| For entity accounts: the controlling persons behind the entity | Yes — reported to their countries of residence, not the entity's |
How the timetable runs
- Calendar year. Data is collected for the year to 31 December.
- Institution reports to its own tax authority in the following months, on a domestic deadline.
- Authorities exchange with each other, generally by the end of September following the reported year.
- Your tax authority matches it against your return, on its own timetable, which may be a further year or more.
So the practical lag between an account balance existing and a question about it arriving is commonly eighteen months to three years. People read a long silence as the system not working. It is the timetable working normally.
What triggers a problem
The mismatch
The institution is not allowed to simply record what you wrote. It has to test your self-certification for reasonableness against everything else it holds about you: your residence address, mailing address, telephone numbers, standing payment instructions, and any power of attorney or signatory with an address elsewhere.
If you declared tax residence in one country while your address, your phone number and your standing instructions all point at another, the institution must resolve the conflict. In practice it will ask you for documentary evidence — and the document it wants is a certificate of tax residence issued by the country you claimed. Not a residence permit, not a utility bill. A certificate from a tax authority.
The US indicia
Separately, FATCA requires institutions to search for US indicators: US citizenship or residence, a US place of birth, a US address or telephone number, standing instructions to a US account, or a US power of attorney. Any one of these triggers a request for curing documentation — typically a Form W-8BEN plus, for a US birthplace, evidence of loss of US nationality. A US place of birth on your passport will generate this correspondence for the rest of your life, whatever your current citizenship.
The arrangements designed to defeat it
Schemes marketed as making you invisible to CRS were themselves made reportable. Under the OECD's mandatory disclosure rules, intermediaries must report CRS avoidance arrangements and opaque offshore structures to their own authorities — meaning the adviser selling you the workaround has a reporting obligation about the workaround. Residence-by-investment used specifically to misrepresent tax residence sits squarely in that category.
What to actually do
- Declare every tax residence you have, including one you are unsure about. Multiple entries on the form are normal and expected; an omission is the thing that reads badly later.
- Update the institution when you move. A self-certification becomes invalid on a change of circumstances and you are usually contractually obliged to notify within thirty days. Almost nobody does, and the stale address is what creates the mismatch.
- Obtain a certificate of tax residence from the country you claim, annually, in the year it applies to. This is the document that resolves every conversation in this article, and it takes weeks to obtain and cannot be backdated.
- Keep your day counts contemporaneously, because the certificate usually depends on them and the domestic test is rarely a simple 183 days.
- Expect the letter. Receiving a query is not an accusation. Being unable to answer it with a certificate and a day count is the problem — not the query itself.
The system does not detect wrongdoing. It detects inconsistency, and then a human decides what the inconsistency means. Your job is to leave no inconsistency to interpret.
One record behind every declaration
Residence, presence and the certificates that evidence both — kept as you go, so the answer to a bank's question already exists before it is asked.
See how residency worksFounders 8 does not provide tax advice. Tax residency depends on facts and rules specific to each jurisdiction — review your position with a qualified adviser.