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What is the Common Reporting Standard (CRS) for Banking?

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Dateline: Kuala Lumpur, Malaysia

Over the past decade, the world of offshore banking has changed for good.

In the past, most people viewed offshore banking as a way for the ultra-wealthy to hide their money in secretive vaults in order to evade taxes, and that stereotype still continues to some extent today.

However, as the world becomes more globalized and connected, offshore banking is following suit.

For those of us who use offshore banking, this development is both helpful and harmful.

On one hand, offshore banking is becoming more accessible to everyday users, and increased transparency has weeded out shadier actors that put your money at risk.

On the other hand, this drive for regulation has also made offshore banking more difficult, and banking privacy is just about dead.

Most of these problems come from two pesky acronyms – FATCA and CRS.

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FATCA – the Foreign Account Tax Compliance Act – is a US law that forces non-US banks to provide the IRS with information about their US customers, whereas CRS – the Common Reporting Standard – is a global reporting standard that allows tax authorities from multiple countries to access information about their citizens’ finances.

Although both FATCA and CRS are information sharing standards used by governments to track citizens’ use of offshore banks, CRS casts a wider net that affects more persons and jurisdictions than FATCA.

However, as a former US citizen, I’ve written quite a bit on FATCA and how it affects US citizens banking offshore, but I’ve spent comparatively little time discussing CRS and its impact on global offshore banking.

Therefore, to help you better understand how CRS works and how it can affect your offshore bank accounts, this article will tell you:

Where Did CRS Come From?

Recently, many banks in traditional tax havens like Switzerland and the Cayman Islands announced that they were out of the out of the secrecy game.

In light of new regulations, these traditional offshore hubs had to either comply with directives like CRS or risk losing many of their customers.

You see, over the past two decades, a number of high-profile scandals involving the use of foreign bank accounts for tax evasion and other illicit purposes came to light, which strengthened calls for increased oversight of the offshore financial sector.

For example,UBS Group, a Swiss investment bank, came under investigation in 2007 for allowing clients to use its services to evade taxes, and in 2008, banks in Liechtenstein fell under similar scrutiny.

Then, a number of large-scale document leaks further intensified this push to regulate offshore banking.

The 2014 Luxembourg Leaks exposed multiple tax avoidance schemes conducted in this small banking jurisdiction, and the infamous Panama Papers detailed a number of questionable offshore practices by notable individuals and corporations.

CRS and tax evasion

After a number of high-profile cases involving offshore jurisdictions and tax evasion, many governments tightened their grip of their citizens’ offshore activities.

Although these scandals certainly aren’t representative of most people who use offshore banking for legitimate reasons, they reinforced the idea that going offshore is synonymous with evading taxes and breaking the law.

As a result, governments began to seek ways to regulate their citizens’ offshore activities, and compliance mechanisms like FATCA and CRS were born.

FATCA: Where it All Began

In 2010, the US government passed the Foreign Account Tax Compliance Act, which spelled the beginning of the end for banking privacy.

If you’re not familiar with FATCA, you can read a bit more about it here, but essentially, FATCA requires that all foreign banks and financial institutions provide the IRS with information about all of their US person customers.

Although FATCA allowed the IRS to catch a few perpetual tax dodgers, it ultimately made life a lot harder for the majority of law-abiding US citizens living and banking abroad.

Many banks decided that complying with FATCA was just too much of a hassle, so they either got rid of their US person customers or stopped accepting new US accounts.

US citizens can still bank offshore, but it’s far more difficult today than it was ten years ago.

The most significant side effect of FATCA, however, was that it essentially killed bank secrecy for US persons, paving the way for other countries to do the same for their citizens.

The Birth of the Common Reporting Standard

After the US implemented FATCA, the rest of the world took eliminating banking privacy a step further with the Common Reporting Standard.

In 2014, the Organization for Economic Cooperation and Development (OECD) created a system for the automatic exchange of information between offshore financial institutions and tax authorities, which became known as CRS.

Like FATCA, CRS forces banks and other financial institutions to provide tax authorities with information about their customers under the premise of increasing tax compliance.

CRS, however, is a much larger program than FATCA.

With nearly 110 countries on board, it’s become a massive information-sharing network that monitors the financial activities of residents as well as people who use those banking jurisdictions.

Although CRS is still in its infancy, many governments are already sharing banking data with one another, meaning the end of banking privacy as we knew it.

How Does CRS Impact Offshore Banking?

Although most people can still bank offshore rather easily, laws like FATCA and CRS have changed the landscape of offshore banking for good.

CRS offshore banking

CRS and FATCA have changed the world of offshore banking, so you need to ensure that your offshore strategy is up to par.

First, with these new developments, you absolutely must ensure that your offshore strategy is 100% legal and transparent.

The truth is simple: there’s no such thing as “hiding money” anymore.

Most banks worth their salt are going to comply with FATCA, and the vast majority of quality offshore jurisdictions are a part of CRS.

If you try to squirrel away your money in some kind of secret account, the reality is that you will get caught, and the consequences of that are far worse than paying a bit more in taxes each year.

Second, because CRS forces banks to ask where you pay taxes, you generally need to have some kind of tax residence in order to bank in CRS countries.

Banks have never been very friendly toward the idea of being a digital nomad who doesn’t have any kind of tax residency, and CRS has only made this lifestyle more difficult.

Under CRS, banks need to send your information somewhere – and most won’t accept you if you tell them that you don’t pay taxes anywhere.

This is what I call the “Nomad Tax Trap.”

Being a “resident of nowhere” is becoming increasingly difficult to pull off, particularly when you add CRS into the mix.

Therefore, if you’re globally mobile, I often suggest that you establish tax residence in a country with low – or, better yet, no – taxes in order to avoid some of the hassles that come with being a “resident of nowhere.”

Finally, compliance measures like CRS and FATCA have generally made opening an offshore bank account more difficult.

Not only have FATCA and CRS added to the amount of paperwork that you’ll need to fill out, but they’ve also caused many banks to be less inclined to open accounts for foreigners in the first place.

While some banking jurisdictions, such as Georgia, still welcome everyone with open arms, others have become a bit more selective about their clientele in light of these new regulations.

Hong Kong, for instance, used to be a hub for offshore banking, but thanks to a combination of increased compliance standards and an influx of wealth from mainland China, many banks in that jurisdiction have decided that low-value foreign accounts simply aren’t worth their time.

The same goes for many other traditional offshore hubs. While many of them aren’t completely closed off to foreigners, certain banks won’t want to deal with you unless you’re bringing in a substantial amount of wealth.

You may or may not agree with these new regulations, but CRS and FATCA have drastically altered the world of offshore banking, so you need to pragmatically develop an offshore strategy for this new day and age.

Can I Legally Avoid CRS?

As you refine your offshore strategy, you may wonder whether you can legally avoid CRS.

How to Avoid CRS

With the right offshore strategy, you can legally avoid CRS.

Whether you like to have a bit of banking privacy or you’re a digital nomad “resident of nowhere,” it’s perfectly reasonable to not want to deal the hassles that come with these kinds of regulations.

You see, while I support the idea of having some form of compliance mechanism in place, I also view measures like CRS and FATCA to be regulatory oversteps by governments that tend to automatically view people who use offshore banking as criminals.

However, even if you’re not a fan of these kinds of measures, you still need to be pragmatic – and in the case of your offshore strategy, being pragmatic means following all laws that apply to you.

That being said, there are ways to avoid CRS that won’t land you in any legal hot water.

As you read through this section, keep in mind that, again, you must follow all applicable laws.

This information is meant to get you thinking about your offshore strategy – not to provide you with one.

What you can and cannot legally do will depend on your individual circumstances, so if you truly want to never deal with CRS again, then I highly recommend consulting a professional.

Who Can Legally Avoid CRS?

You can only legally avoid CRS if you do not have any reporting obligations to your country of citizenship or country of residence.

Obviously, if you’re a “resident of nowhere,” then that’s a non-issue.

However, the majority of countries around the world do require you to report your foreign accounts independently of CRS.

US citizens, for instance, may not technically be a part of CRS, but because they must report all of their foreign assets to the IRS, they cannot technically avoid it.

The same goes for citizens of most developed countries. If you live somewhere like Germany or New Zealand, you likely have some kind of foreign account reporting requirements outside of CRS.

If you’re a resident of a territorial tax country, however, then there’s a chance that you may not have this requirement.

Territorial tax countries only force you to pay tax on income earned within their borders, so by and large, they don’t care much about their residents’ foreign accounts and investments.

While this type of tax system is quite favorable for a number of reasons, your exact reporting requirements will vary from country to country.

Therefore, you should not assume that you do not have to report certain assets just because your country of residence uses territorial taxation.

If your country of residence does not force you to report foreign bank accounts, however, then you could potentially avoid CRS in a perfectly legal fashion – if you plan correctly.

Non-CRS Countries

If your tax residence does not legally require you to report your foreign bank accounts, then you can potentially avoid CRS by banking in non-CRS countries.

However, before you dive in too deep, you need to keep two issues in mind.

First, I’m going to remind you again that you need to ensure that your offshore strategy is completely and totally legal.

I know I sound like a broken record, but too many people see this kind of information and take action that’s ill-thought-out at best and illegal at worst.

While this information might inspire you to reevaluate your offshore strategy, you should hammer out the details with a professional consultant.

Second, you should also understand that not all non-CRS countries are good countries to bank in.

While a number of sound countries aren’t party to CRS, most non-CRS countries simply aren’t places where you want to put your money. Somalia, for instance, isn’t a part of CRS, but you’d be a fool to open a bank account there.

Fortunately, there are a handful of excellent banking countries that aren’t a part of CRS. You can find a more detailed list here, but here’s a brief overview of some of the best non-CRS countries to bank in:

Armenia Non CRS

Armenia is one of many emerging banking destinations that are not a part of CRS.


Armenia is one of the top emerging banking jurisdictions in the world. Opening an account there is rather easy, and many banks offer excellent interest rates on deposits made in local currency or Russian Rubles, making the country an interesting banking option.


Cambodia is a rapidly growing frontier economy with plenty of opportunities for investors, and with so many established Asian and western banks moving into the country, its banking sector is rapidly becoming on par with its neighbors.


Georgia is perhaps the easiest place to open a bank account in the world, and it offers stable banking with high interest rates. Plus, as an incredibly business-friendly country, you’ll find plenty of other great investment and business opportunities there.


If you want to enjoy banking privacy while getting a second residency at the same time, you can deposit $5,000 in local currency into an account in Paraguay.

The United States

Although the US has managed to strong-arm other countries into giving up banking information on its citizens, it’s actually not a part of CRS.

The US does engage in some level of information-sharing, but it does so on its own terms. Ironically, the State of Delaware has even been referred to as “the world’s largest tax haven.”

While you shouldn’t assume that the US will afford you much in the way of banking privacy, there are actually a number of good reasons to bank there, including the fact that it’s not a part of CRS.

Conclusion: Why Onshore is the New Offshore

Now that you’re more familiar with how CRS has impacted the world of offshore banking, you may be tempted to adjust your offshore strategy to follow suit.

If that’s the case, then I’ll leave you with one last piece of advice: onshore is the new offshore.

What this means is that the mentality behind using foreign bank accounts has shifted from this idea of burying money in secretive jurisdictions to using international banking as a tool to grow and protect your assets legally and transparently.

This means taking a more pragmatic approach to your offshore planning.

Instead of seeking a bank on a tiny, nondescript island in the Caribbean, you should look for banks in stable jurisdictions with benefits like high interest rates or high-quality deposit insurance.

Whether you agree with measures like FATCA and CRS or not, you need to account for them as you plan your global strategy to enhance your freedom and your wealth.


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