London Governance & Compliance Academy

OECD’s Common Reporting Standards (CRS) and the Crypto-Asset Reporting Framework (CARF)

Introduction and Rationale

The Common Reporting Standard (CRS), an initiative under the aegis of the Organisation for Economic Co-operation and Development (OECD), emerged from the increasing need to address the widespread issue of tax evasion on a global scale. In the wake of the 2008 financial crisis, international attention sharply focused on the scale of tax avoidance and evasion. With several countries grappling with the aftermath of the economic downturn, there was heightened recognition of the critical revenue losses due to these illicit activities. As a result, the G20 nations mandated the OECD to devise a global standard for the automatic exchange of financial account information, leading to the inception of the CRS in 2014.

The primary purpose of the CRS is to combat tax evasion by providing tax authorities with pertinent information from financial institutions about foreign account holders and certain entities. By fostering transparency and cooperation between countries, the standard aims to ensure that taxpayers pay the correct amount of tax to the right jurisdiction. This, in turn, discourages individuals from hiding assets offshore to evade tax obligations.

In terms of universality, the CRS has achieved substantial global adoption. Over 100 jurisdictions have committed to its principles, and a significant number of these have already begun exchanging information. However, it’s worth noting that while the CRS has a broad reach, not all countries participate, and there are variations in implementation and timelines among the adopting countries.


The Standard consists of four key parts:

  1. A model Competent Authority Agreement (CAA)

The model CAA functions as an integral facet of the CRS. Essentially, the CAA delineates the detailed modalities of how information will be automatically exchanged between participating jurisdictions under the CRS. It provides the necessary legal framework for the actual exchange of financial account information, thus ensuring that the commitments under the CRS are upheld by participating countries. By establishing this model, the CAA ensures that the procedures for data transmission are consistent, efficient and secure, while also making provisions to safeguard the confidentiality of the information exchanged. This ensures transparency, mutual trust and efficacy in the global endeavour to combat tax evasion.


  1. The Common Reporting Standard (CRS)

In practical terms, the CRS necessitates financial institutions, such as banks and investment entities, in participating countries to gather specific information regarding their account holders, particularly those from foreign jurisdictions. This information typically encompasses account balances, interest, dividends, and sales proceeds from financial assets. Annually, these institutions then report this data to their respective national tax authorities. These authorities, in turn, automatically exchange this information with the tax authorities in the account holders’ countries of residence, ensuring cross-border transparency and aiding in the detection and prevention of tax evasion.


  1. The Commentaries on the CAA and the CRS

The Commentaries on the CAA and the CRS serve as an indispensable segment of the CRS. These commentaries provide clarity, elucidating the provisions and requirements stipulated within the CAA and the CRS. By offering detailed interpretations and illustrative examples, they aim to ensure consistent application and understanding of the CRS across different jurisdictions. Essentially, the commentaries act as a guiding document, assisting participating countries in the effective implementation and administration of the CRS, thereby fortifying the global effort against tax evasion.


  1. ‘The CRS XML Schema User Guide’

The ‘CRS XML Schema User Guide’ represents the fourth pivotal component of the CRS. This guide provides a structured framework and technical instructions for jurisdictions to produce consistent, electronic exchange of information reports in line with CRS requirements. By adopting the Extensible Markup Language (XML) format, the guide ensures a uniform mode of communication, facilitating the seamless and efficient transmission of vast volumes of financial data between tax authorities worldwide. This standardisation not only promotes consistent reporting but also streamlines the data interpretation process across different jurisdictions.


The Crypto-Asset Reporting Framework (CARF)

In light of the rapid development and growth of the Crypto-Asset market and to ensure that recent gains in global tax transparency will not be gradually eroded, in April 2021 the G20 mandated the OECD to develop a framework providing for the automatic exchange of tax-relevant information on Crypto-Assets. In August 2022, the OECD approved the Crypto-Asset Reporting Framework (CARF) which provides for the reporting of tax information on transactions in Crypto-Assets in a standardised manner, with a view to automatically exchanging such information.

CARF offers a structured approach to the disclosure and reporting of transactions involving crypto-assets and it sets out specific guidelines and standards for businesses, financial institutions and individual traders to report their crypto-asset activities. By defining and standardising metrics, data points and reporting timelines, the framework ensures consistent documentation and disclosure practices across the crypto industry. This, in turn, aids regulators and stakeholders in monitoring, assessing and ensuring compliance within the crypto-asset ecosystem. Given the decentralised and borderless nature of crypto-assets, the CARF’s standardised approach plays a crucial role in bringing clarity and order to a previously nebulous sector.


The Effectiveness of CRS and CARF

The inception of both the CRS and CARF has undeniably ushered in an era of enhanced transparency and accountability in global financial transactions. The CRS, with its focus on tax evasion, has bridged communication between tax jurisdictions, allowing for a more comprehensive grasp on offshore assets and incomes. Similarly, CARF’s standardised approach has brought semblance and clarity to the nascent and often nebulous crypto sector. However, despite their successes, challenges persist. Some financial actors have found ways around the CRS, exploiting gaps or mismatches between jurisdictions. Meanwhile, the rapid evolution of crypto technologies sometimes outpaces CARF’s regulatory adaptations, potentially leaving newer assets underreported. In summary, while both frameworks signify monumental strides towards financial clarity, continuous evolution and vigilance remain imperative.