CARF Made Practical: The Onboarding Rules Everyone Must Get Right

It is easy to underestimate just how challenging it is to operationalize a new reporting regime. CARF may be new, but it's just like FATCA and CRS for crypto-assets, right? Not so fast, it can be easy to forget the nuance or that, for some of us, we have not been caught by these regulation nets before, and ensuring compliance is not an easy task.

The first thing we must all remember is that compliance begins at onboarding: rubbish in means rubbish out. And with CARF taking effect from 2026, resulting in first exchanges of information occurring in 2027, onboarding processes need to be ready as soon as possible. Below, we discuss key rules and tasks to ensure compliance.

Self-certifications

Crypto-Asset Service Providers (CASPs) are required to perform due diligence procedures on their users to ensure they can report accurately under CARF. Whereas under CRS identification of reportable persons could be done to a certain degree using publicly available information or data received through AML/KYC procedures, under CARF, self-certifications must be collected from all users, new and pre-existing to CARF.

Self-certifications can collect a variety of information depending on jurisdiction requirements or CASP operational needs. But for a form to be considered complete, it must, at a minimum, collect the following:

Validation

A self-certification is only helpful where we know that the information is correct. Therefore, CASPs are required to verify that the information on a self-certification is consistent with other information already known about a user and with the information on the self-certification itself.

Verification can be split into 3 separate parts:

• Internal records,

• Reasonableness, and

• Consistency.

Internal records typically come from account onboarding and AML/KYC processes, with procedures required under different regulations, but the information can be used to ensure that the user is who they say they are. Differences should be investigated, with records either updated to ensure accuracy or a new form requested prior to service provision.

Reasonableness is based on the information given in the self-certification itself. For example, if a user states that they do not have a TIN but they are resident in a jurisdiction that automatically issues them at birth, you have reason to know that the form is not correct.

Consistency is always key, and we must ensure that the self-certification agrees with the information and documentation provided elsewhere. For example, if a CASP has a user’s U.S. passport on file but they have not noted the U.S. as one of their tax residencies, you know that the information is not consistent.

Changes in Circumstances

Responsibilities for CARF do not end once the CASP receives a self-certification. Indeed, any self-certification cannot be relied upon once the CASP knows or has reason to know that the information on the self-certification is not correct.

Therefore, CASPs must constantly be in a position to detect changes to relevant information that could affect their reliance on the self-certification. And once that detection is made, the user should be contacted and a new self-certification collected.

This is a living process, not a one-time onboarding event.

High-quality data

The above are responsibilities required through CARF, but “just enough” is not always enough. In order to ensure a better understanding of your responsibilities and client base, and to ensure an easy reporting process, you must ensure that you have high quality data. That means readily accessible, protected, and accurate information, with a clear audit trail on the processes gone through to know your users throughout their service life cycle.

It is just as important to know the “why” and “how” as it is to be compliant.

Technology and Automation

The scale and frequency of required self‑certifications, combined with the validation, consistency checks, and change‑in‑circumstance monitoring that follow, make manual processes impractical for any CASP with meaningful client volume. Automated workflows can dynamically collect digital self‑certifications, validate entries against regulatory rulesets and internal records, flag inconsistencies in real time, and maintain a full audit trail for regulators.

Beyond workflow efficiency, technology also ensures that the underlying data is accessible, protected, and reliable for tax reporting. Centralised digital records eliminate fragmented spreadsheets and email‑based processes, reducing the risk of lost or outdated information. Secure, permission‑based access controls protect sensitive customer and transaction data while still enabling authorised teams to retrieve what they need for reporting or regulatory review. Automated controls also enforce data integrity, ensuring that any updates, corrections, or changes in circumstance are captured systematically and reflected consistently across downstream reporting processes.

Automation therefore not only reduces the risk of human error, ensures continuous monitoring rather than one‑off reviews, and enables firms to keep pace with evolving domestic implementations, but also strengthens the accuracy, security, and availability of information needed for CARF reporting.

In short, the accuracy and efficiency demanded by CARF simply cannot be achieved at scale without strong technological support.

How TAINA can help

CARF raises the bar for onboarding standards in the digital asset sector. The institutions that invest early in data quality, technology, and robust client‑handling processes will find compliance manageable and avoid costly remediation later.

Because CARF begins at onboarding, TAINA’s automation can ensure that every self‑certification entering your system is complete, validated, and audit‑ready. Our solution is designed to provide the highest quality tax form validation service whilst ensuring an easy and thoughtful user experience, both for tax operations professionals and their clients.

TAINA’s platform will support CASPs by:

• Validating self-certifications against requirements and cross-checking against books and records

• Automation and consistent rules improve operational efficiency

• Keeping reportable data in a safe and auditable system

• Monitoring for changes in circumstances

• Exporting data for reporting no matter what system you are using

With robust validation controls in place, institutions can approach filing season with greater confidence and reduced operational risk.

If you are interested in seeing how TAINA can support and streamline your compliance processes, get in touch or request a demo to see it in action.

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