January 04, 2018CRS and the 3 Changes It’s Bringing to Hong Kong and Singapore

singapore lion!

Compliance regulations impact financial institutions throughout the world. While some regulations only apply to certain regions, others apply on a global level.

One compliance standard that has an international influence is The Common Reporting Standard (CRS).

So what is it?

CRS is an agreed upon guideline for the Automatic Exchange of Information (AEoI), and its main aim is to find out who pays taxes in which countries. Although it’s international, the way in which it affects each region differs.

As financial hubs, Hong Kong and Singapore are already feeling CRS’s significant and lasting impacts. Since it’s been implemented, both regions’ bilateral exchange relationships are increasing and could ultimately exceed 70 jurisdictions. Drawing from in-depth experience with CRS and client lifecycle management implementations in these regions, Appway has identified the three elements of banking that will be most affected.

IT and Operational Cost

Customer Due Diligence!
This process assesses to what extent a customer is exposed to a variety of risks.

Going forward, banks will have to change IT and business processes for new entity classification, information gathering, and CRS reporting. Changes to due diligence procedures will also take place each time the government signs on a new AEoI jurisdiction. If financial institutions don’t react quickly and appropriately, it will lead to inefficiency and compliance burdens.

Client Relationship

CRS adds complexity to the lifecycle management of bank clients, from onboarding onwards. This affects client experience and satisfaction, as there is a higher information burden and more documents to fill out, which leads to slower time to service.

Data Privacy

While clients and financial institutions may have concerns about the secrecy of banking data, banks are obligated to explain to their clients why data are collected. Therefore, financial institutions need to incorporate CRS requirements into their data protection terms.

What does this mean for financial institutions in Hong Kong and Singapore?

Hong Kong and Singapore implemented CRS in the start of 2017, and the first bilateral exchange will take place by September 2018. Now that CRS requirements are in place in these regions, waiting is no longer an option. At this point, financial institutions should be amending their processes, if they haven’t already.

To read how Appway Onboarding can keep your bank compliant, download our Legal and Compliance Factsheet.

Share on
Written byZoe NiuSenior Solution Consultant, Appway