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
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.
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.
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.