On 5 April 2018, the OECD released the Second Edition of the CRS Implementation Handbook. This helpfully contains an extensive section on the treatment of trusts in Chapter 6, which will hopefully provide some much needed guidance for practitioners where answers were previously lacking.
The key difference from the first edition is that the updated handbook contains additional guidance to assist with the identification of "Controlling Persons" in a chain of ownership. In particular, the second edition:
- provides clarity on when and how Controlling Persons should be identified where there is a chain of ownership;
- clarifies the approach needed to be taken on the "25% threshold" outlined in the 2012 FATF Recommendations;
- details how entity accounts should be treated and the need to identify Controlling Persons in respect of both a Reporting Financial Institution and a passive NFFE;
- contains useful flow chart style examples to help illustrate how Controlling Persons can be identified; and
- clarifies that in the case of an account closure, the fact of closure and any gross payment made or credited until the date of account closure must be reported.
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