Listed interests in financial institutions caught by Common Reporting Standard

Under the CRS (the global version of Foreign Account Tax Compliance Act (FATCA)), which has taken effect in many jurisdictions from 01 January 2016, listed equity and debt interests in financial institutions such as exchange traded funds, capital markets issuer SPVs and UK investment trust companies fall within the scope of FATCA-like due diligence and reporting rules. Under FATCA, such interests may have benefited from a “listing exemption” such that the interests were not subject to due diligence and reporting requirements, although under rules applicable in some jurisdictions this was for a transitional period only (ending on 01 January 2016).

The CRS took effect from 01 January 2016 in the UK, each of the British Crown Dependencies and Overseas Territories and European jurisdictions (except Austria, which will implement the CRS from 01 January 2017) and various other jurisdictions.

The extent of the new CRS (and, where applicable, FATCA) due diligence and reporting burden that will fall on financial institutions with such listed equity or debt interests will depend on the particular arrangements. We are advising financial institutions affected by the new rules. Financial institutions affected should put new due diligence and reporting procedures in place now, to the extent they have not already done so.