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How to avoid the CRS and how they can help you to protect your money

Contributed by CG Bank
15 March, 2019


Eight legal loopholes involving the regulations concerning affected accounts and assets.

1. Business accounts that existed before the CRS came into effect and are under $250,000 are not included

This is one of the larger legal loopholes. All business accounts opened before the CRS came into effect will continue to be protected by bank secrecy. At least if the bank and the country decide to do so, which is to be expected.

In other words, if you prefer to keep your accounts private, you would have to open as many company accounts as you need in a country where the CRS is not yet in effect.

2. The CRS does not include certain existing private accounts

If the private account is a Cash Value Insurance Contract or an Annuity Contract, it does not enter into the exchange of information, provided that the financial institution is not authorized to sell the contract.

3. The account balance is only exchanged on the agreed date

The exchange of information does not provide a complete picture. In other words, information about the account balance and the accrued interests is only exchanged on the set date, which is the 31st December.

Therefore, if your business account existed before the CRS came into effect, you could transfer the money to another account before the deadline (to a bank account in a country without the CRS, for example) and return the money a few days later.

This way, the business account would remain outside of the common reporting standard.

4. Investment in property is excluded

As I already mentioned, investments in property are not covered by the CRS. It does not matter whether you manage them under your own name, under a fake name or through a company.

5. Advantages for undocumented accounts (without an address)

Accounts for which an address could not be verified show as undocumented. In these cases, information cannot be exchanged since the accounts cannot be assigned to any country.

Accounts may appear undocumented because the financial institution (at that time) did not ask for an address or because the information could not be found manually.

In these cases, there are no penalties nor is the account closed.

6. Closed account status

According to the Common Reporting Standard, closing an account only requires conveying the fact that it has been cancelled but the amount deposited in the account has not.

In this way, the systematic opening and closing of bank accounts in order to make a single large transaction would escape the exchange.

7. Leeway when an account is considered closed

We must add to point 6 that each jurisdiction determines when an account is considered "closed".

Tax havens could opt for a more flexible definition of this term so as to avoid the exchange of information in cases where the account is still available but without any transactions.

The account could also be closed on the date chosen for the exchange and then reopened immediately after.

For tax havens, it is a good way of avoiding the common reporting standard.

8. There will be no public statistics of the different types of financial accounts

No public statistics on the accounts exchanged are available. Particularly the values of accounts that are closed, undocumented or not included in the CRS as they could provide information that would make linking these accounts to specific individuals or entities easier.

This article was created by CG Bank S.A. It is a 100% offshore bank incorporated under the laws of the Autonomous Island of Moheli, within the Union of Comoros (no CRS offshore bank account). CG Bank S.A. is a white-listed, non-CRS, offshore bank.





 


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