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  • Obtaining valid self-certifications for all new accounts

    The Common Reporting Standard (CRS) requires a reporting financial institution (RFI) to obtain self-certifications for all new accounts.

    There are two key requirements when collecting self-certifications:

    • ensuring the self-certification is valid
    • confirming the reasonableness of the self-certification.

    RFIs need to have robust processes in place to ensure that valid and reasonable self-certifications are obtained for all new accounts.

    If a self-certification fails validity or reasonableness checks, the RFI must either:

    • obtain a new self-certification, or
    • document the reasonable explanation and documentation supporting the validity and reasonableness of the original self-certification.

    A valid and reasonable self-certification must generally be obtained on ‘day one’ of the account opening process.

    In limited circumstances, where a reasonableness check of the self-certification cannot be completed because it is a ‘day two’ process undertaken by a back-office function, it must be checked within a period of 90 days and no later than the deadline for reporting. RFIs should only adopt a ‘day two’ reasonableness check if they have the functionality to apply a block to all transactions or close accounts.

    Conducting the reasonableness check on ‘day two’ does not change the overarching requirement that RFIs must always obtain a valid and reasonable self-certification for all new accounts. The ‘day two’ process is an operational concession. The RFI is placed in the same position or no more favourable position for reporting purposes than if they had applied a ‘day one’ process.

    Strong measures if a valid and reasonable self-certification is not obtained

    RFIs need to have strong measures in place where a valid and reasonable self-certification is not obtained.

    The following options are considered strong measures:

    • Applying a block to all customer transactions on the account. The block may only be removed when a valid and reasonable self-certification is received.
    • Closing the account.

    Penalties may be imposed on RFIs that do not apply strong measures to obtain self-certifications by the reporting deadline for the applicable reporting period. RFIs that adopt the strong measures outlined above would not be subject to penalties (assuming they have otherwise taken reasonable steps to comply with their CRS obligations).

    RFIs should keep a record of any instances where they have failed to obtain valid self-certifications.

    Reporting for new accounts on the basis of an indicia search (where a valid and reasonable self-certification has not been obtained) is not considered a strong measure to ensure that self-certifications are always obtained for all new accounts.

    See also:

      Last modified: 09 Jun 2021QC 65668