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Public Speaking

CRS Compliance Reviews in Hong Kong: immediate steps and practical solutions



HONG KONG, TUESDAY 22 OCTOBER 2019, 9.00-16.00

> What will the Inland Revenue Department look at in priority? > What can you do about it immediately and in the next 6 months? > What is often not done or done incorrectly? > Which procedures, tools and internal control do you need to put in place?



Overview CRS Audit and Reporting Lifecycle

  • CRS Audit in Context - Global Forum CRS Peer Review Process

  • CRS Audit Overview: Entity, Process and Reporting

  • Reportable Account Lifecycle - Audit Risk Implications, at each of the following stages:

(a) Identification; (b) Classification;

(c) Monitoring; (d) Reporting; (e) Closure

Audit Failure: Top 5 areas of potential failure and how to avoid:

  • Insufficient CRS specific internal controls (CRS Manual vs. AML Manual);

  • Insufficient separation of CRS client base into CRS relevant categories;

  • Insufficient “change of circumstance” train- ing, escalation procedures, internal controls and communication protocols;

  • Insufficient “anti-avoidance” training, detection or deterrent processes and controls;

  • Insufficient application of “reasonableness” test to self certificate claims

Immediate steps:

  • internal audit, which areas to concentrate on?

  • reporting outcome assurance testing - sample reports vs. entire CRS client base?

  • staff competency testing, what to test, how to interpret results?

  • CRS/AML Manual review - key drafting provisions

General best practice steps:

  • Anti-avoidance training, explaining the requirements of the Mandatory Disclosure Rules for CRS Avoidance Arrangements;

  • Steps to reform CRS data management to ensure integrity of data;

  • Managing third party providers of CRS compliance services



Account identification – new accounts

  • New account identification and treatment

  • Review of account opening documents

  • Opening of accounts

Account identification – preexisting accounts

  • Determination of pre-existing accounts

  • Optional treatments in the Due Diligence Procedures of pre-existing accounts

  • Review Procedures

  • Identification and treatment of undocumented accounts

Account monitoring procedures

  • Monitoring of account details

  • Documentation and follow-up of CIC and other changes

  • Review of undocumented accounts, dormant accounts and excluded accounts

Account monitoring procedures / Trusts

  • Settlor: exclusion of benefit, surrender of power to revoke the trust

  • Beneficiary: removal or exclusion of a discretionary beneficiary, removal or exclusion of a fixed interest beneficiary

  • Trustee: retirement, removal

  • Protector: retirement, removal

Account closure procedures

  • Identification of closed accounts

  • Finalising closed accounts

  • Recording closure of accounts



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