Marco Zawar MBA (VWA)/ LLM (MCI, FSFM)
The “Cyprus papers” illustrates how CRS and FATCA might be undermined
In August 2020, Al Jazeera’s Investigative Unit revealed "The Cyprus Papers" .
The Paper disclose, that between 2017 and 2019 more than 2,500 individuals from 74 jurisdictions (including #China, #Hongkong, #UK and the #USA) became Cypriot citizens under the ‘Cyprus Investment Programme’ (#CIP).
Such programs, also known as Citizenship by Investment/Resident by Investment Schema (#CBI/#RBI schemes), may allow wealthy members of the society (including political exposes persons (“#PEPs”)) to escape from their #tax and potential other obligations in their country of origin.
The #OECD in April 2018 addressed already concerns by saying that
"Identity Cards and other documentation obtained through CBI/RBI schemes can potentially be misused abuse to misrepresent an individual’s jurisdiction(s) of tax residence and to endanger the proper operation of the CRS due diligence procedures"
and addressed that financial institutions should consider CBI/RBI schemes into account when performing their #AML/#KYC and due diligence obligations under #CRS.
The reader of the article should keep in mind, that CBI/RBI Schemes affects not only the AML/KYC procedures under CRS, they also need to be considered within the AML/KYC and due diligence procedures under #FATCA and the US Qualified Intermediary (#QI) Regime.
To support the integrity of CRS, FATCA and the QI Regime #Hongkong based financial institutions ("FI's") are encourage to establish and to maintain control procedures and communication channels to identify trigger events (aka Changes in Circumstances (“#CiC”)) enabling them to identify accountholder and beneficial owner claim tax residency based on CBI/RBI Schemes.
About the Author
I am a Banker, MBA (finance and accounting) and LLM (international business and tax law) with 30+ years experiences, business consultant, project manager, RegTech Product manager and in-house legal and tax counsel acquired within leading Private Banking Institutes, Wealth Management Organisations, Central Securities Depository & Clearing houses and IT solution provider located in Europe and the APAC Region.
I am focused on advisory services and project management in the field of
AEoI, FATCA, EU-DAC6, OECD-CRS;
U.S Qualified intermediary regime (QI);
Withholding Tax on Capital gains and Investment Income
Securities transaction tax (stamp tax); and
Austrian, German, Hong Kong, Swiss and U.S. International Tax Law