FATCA and CRS: What Accountants Need to Get Right for Cross-Border Clients

International Tax and Transfer Pricing might get the headlines, but two older, quieter regimes generate far more routine compliance work for accountants: FATCA and the Common Reporting Standard (CRS). Between them, they govern how banks, brokers and other financial institutions report account information across borders — and firms advising clients with international assets or income need to understand both, not just one.

FATCA and CRS are related but not identical

FATCA (the US Foreign Account Tax Compliance Act) requires financial institutions outside the US to report accounts held by US persons to the IRS, either directly or via their local tax authority under an intergovernmental agreement. CRS (the OECD's Common Reporting Standard) is the multilateral equivalent — over 100 jurisdictions exchange account information automatically with each other, not just with the US.

The practical difference that trips people up: FATCA is about US persons specifically, wherever they live, while CRS is about tax residency generally, covering any participating jurisdiction. A client can be in scope for CRS without being anywhere near FATCA, and a US citizen living permanently outside the US is still a FATCA "US person" regardless of where their accounts are held.

What gets reported, and by whom

Reporting financial institutions — banks, custodians, certain investment entities and some insurance companies — collect self-certifications from account holders confirming tax residency (and US status, for FATCA) at account opening, and report annually on accounts identified as reportable. Reported information typically includes account balances, and income such as interest, dividends and gross proceeds.

For accountants, the FATCA/CRS obligation is rarely about filing the report yourself — that sits with the financial institution — but about two things that very much are the accountant's job:

• Getting client self-certifications right, particularly for clients with dual tax residency, recent relocations, or trust and company structures where "who is the account holder" isn't obvious.
• Reconciling what's been reported against what the client has declared — increasingly, tax authorities cross-check CRS/FATCA data against filed returns, and unexplained gaps are a well-known trigger for enquiries.

Where this connects to transfer pricing and international tax work

FATCA and CRS sit naturally alongside the kind of work covered in international tax and transfer pricing engagements — clients with cross-border structures are exactly the population most likely to have FATCA/CRS reporting complexity, and errors in one area often surface issues in the other. A client with an offshore holding structure, for example, needs both transfer pricing documentation for related-party transactions and correct CRS self-certification for the entities involved.

Common problem areas

• Trusts and entities with unclear controlling persons. CRS due diligence requires identifying "controlling persons" of passive non-financial entities, which is often more involved than it sounds for family trusts and holding companies.
• Recently relocated clients. Someone who moved country mid-year can end up with a self-certification on file that no longer reflects their actual tax residency — a common and easily missed gap.
• US persons who don't think of themselves as such. US citizens born abroad, or with a US parent, are often unaware they carry FATCA obligations at all.
• Historic self-certifications never revisited. Financial institutions don't always prompt clients to update status — accountants reviewing a client's structure are often the first to notice a stale certification.

What accountants should be doing

For clients with any cross-border dimension — foreign accounts, overseas property, dual residency, or international corporate structures — build a FATCA/CRS status check into the annual review, not just the initial onboarding. Confirm self-certifications are current, check that reported information (where visible) reconciles with what's been declared, and flag structures with unclear controlling persons before a tax authority does. It's a compliance area with low visibility and low drama most years, right up until a mismatch triggers an enquiry — at which point the cost of not having checked becomes very visible indeed.

A scenario that comes up more often than expected

Consider a client born in the US to parents who relocated when they were a baby, who has lived their entire life outside the United States and has never held a US passport or filed a US tax return. Under FATCA, they are still a "US person" by birthright citizenship, and their accounts abroad are still reportable. This category of client — often called an "accidental American" — is a recurring source of FATCA complications precisely because the client themselves has no obvious reason to think it applies to them, and self-certifications completed without probing citizenship history can miss it entirely. A short, direct question about place of birth and parents' nationality at onboarding catches far more of these cases than relying on the client to volunteer the information.

How CRS due diligence differs in practice

Where FATCA due diligence is binary — is this person a US person or not — CRS due diligence has to establish tax residency, which can be more than one jurisdiction, and can change. A client who splits their time across two countries, or who has recently emigrated, needs their self-certification revisited rather than assumed static from account opening. Financial institutions are required to identify a change in circumstances that would call an existing self-certification into question, but in practice this relies heavily on the account holder — or their accountant — actually flagging the change, which is exactly the kind of detail that surfaces naturally during an annual review if the question is asked directly rather than assumed settled.

Clients with cross-border structures affected by FATCA and CRS are frequently the same clients who need robust anti-money laundering due diligence — the two compliance areas are worth reviewing together rather than in isolation.