CRS compliance for new customers of financial institutions from July 1

KUALA LUMPUR: New onboarding customers of Malaysian Financial Institutions need to provide a self-certification form on their resident status to comply with Common Reporting Standards (CRS) effective July 1, 2017.

Deloitte Tax Services Sdn Bhd’s Executive Director Chee Pei Pei said financial institution have been given until June 2018 to do due diligence and identify existing account holders, either entities or individuals, for their tax residence status.

“The focus is on non-Malaysians. For entity accounts, the threshold is US$250,000, whereby, no reporting or due diligence is required for amounts lower than this.

“As for individuals who have US$1 million in their accounts, there will be added enhancement to verify their position. The account holders need to be interviewed by relationship account managers,” she told reporters at the Labuan International Business and Financial Centre, Malaysia (Labuan IBFC) Tax and Wealth Management Masterclass here yesterday.

In December last year, Malaysia gazetted two Income Tax Orders, namely the Automatic Exchange of Financial Account Information and the Convention on Mutual Administrative Assistance in Tax Matters.

Towards efforts at global transparency, over 100 countries have agreed to an Automatic Exchange of Information (AEOI) relating to financial accounts with each other under the Convention on Mutual Administrative Assistance in Tax Matters.

The Organisation for Economic Cooperation and Development (OECD) has also developed the CRS which sets out the common information to be collected and reported by financial institutions of participating jurisdictions, for purposes of implementing the AEOI locally.

Chairman, Association of Labuan Banks, Khairudin Abdul Rahman said banks would start compiling data, as all the earlier documents and procedures already covered the information needed.

“Basically, it is business as usual for financial institutions as the only additional thing to do is just declare and update information,” he added.

He said banks reviewed accounts on a yearly basis or even six months for higher risk accounts as such, with or without the CRS, and all this information has been updated.

In his opening speech, Labuan IBFC Chief Executive Officer Danial Mah Abdullah said the requirement for transparency and need to conform to initiatives such as the CRS, would be the “new normal” for all financial centres.

“In fact, the demand for higher transparency provides an opportunity for Labuan IBFC, as it has always maintained a high regulatory and supervisory standard along with its commitment to transparency.

“In a way, the current changing global landscape has allowed Labuan IBFC to stand out as one of the well-regulated financial centres,” he added. — Bernama