Are You in Control? - Controlling Persons in Today’s Tax Landscape

Are You in Control? Controlling Persons Under CRS 2.0 & CARF

Ownership and control have long been foundational concepts in taxation, and they continue to draw significant attention from tax authorities worldwide. In tax, transparency is synonymous with fairness, and the truth is often found in the smallest details. Yet in an era where privacy remains paramount, financial institutions, tasked with collecting and maintaining Controlling Person information, frequently struggle to keep this data accurate and up to date.

Who is a Controlling Person?

Under the OECD’s Common Reporting Standard (CRS), a Controlling Person is a natural person who exercises control over an entity, directly or indirectly. While this often refers to substantial shareholders, it may also include day-to-day managers or individuals who exert control through other means. In the case of trusts and similar legal arrangements, multiple Controlling Persons may need to be reported including beneficiaries who may have little practical involvement with the entity.

CRS has required financial institutions to request the disclosure of Controlling Persons for account holders classified as passive nonfinancial entities since its inception. This requirement later expanded to include investment entities in nonparticipating jurisdictions, when managed by another financial institution, which captures U.S. resident investment entities.

Now, the OECD is extending the scope of disclosure even further through CRS 2.0 and the Crypto Asset Reporting Framework (CARF). CRS 2.0 introduces a new requirement to report the type of each Controlling Person. And while CARF applies only to users transacting in crypto-assets, it requires all investment entities managed by financial institutions to disclose their Controlling Persons, individuals who have historically benefited from a degree of financial anonymity.

Why does this matter?

As we’ve previously shared, institutions consistently identify the maintenance of accurate Controlling Person data as a major operational challenge. In practice, this information is difficult to obtain and even harder to keep current:

• Opening a financial account is laborious and time intensive.
• Tax form completion and validation are prone to human error.
• Controlling Persons may change frequently without notifying the institution.
• Account systems may be unable to store CP data, and ongoing data maintenance is resource heavy and operationally complex.

Layered onto these challenges is the constant risk of non‑compliance and the significant fines that may follow, not to mention the reputational damage that can arise when non-compliance becomes public.

What can you do?

Ultimately, the answer lies in control, not as a passive state but as a deliberate, continuous discipline. Institutions should focus on:

• Implementing rigorous, well documented processes and procedures,
• Training staff on tax rules and developments and reinforcing their role in compliance,
• Ensure systems are capable of storing necessary data
• Maintaining strong, proactive communication with account holders, clients, and counterparties, and
• Automating compliance activities wherever possible.

When is the time to act?

Institutions that strengthen their Controlling Person compliance processes today, especially through automation, will be best positioned for CRS 2.0 and CARF tomorrow. A strong, streamlined, and automated compliance program doesn’t just reduce risk; it also creates a smoother, more user-friendly experience for clients and account holders. In other words, better controls ultimately lead to better business.

How TAINA can help

Fewer than half of institutions currently use automated systems for tax form validation and Controlling Person verification. TAINA is uniquely positioned to strengthen your processes and compliance framework. Our solutions:

• Automate the collection, validation, and storage of Controlling Person self-certifications,
• Integrate seamlessly with existing systems and records, reducing disruption and manual effort,
• Centralize data for both entities and their Controlling Persons,
• Crosscheck forms and data using built-in logic for completeness and accuracy,
• Support annual reporting with audit ready, regulator compliant files,
• Reduce operational burden and minimize manual errors,
• Enhance data accuracy and verification through intelligent automation.

We would love to talk to you more about your current documentation validation process and how our award-winning FATCA and CRS Validation platform may add value to your organisation.

For more information on how our fully automated FATCA and CRS Validation platform can add value to your business, get in touch or request a demo to see it in action.

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